SPECIAL REPORT The Top 7 Stocks for 2024

7 Small-Cap Stocks Signaling a Sizeable Breakout

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  • Medifast (MED): Medifast aligns with a relevant market.
  • Cross Country Healthcare (CCRN): Cross Country Healthcare enjoys fundamental upside potential.
  • Benchmark Electronics (BHE): Benchmark Electronics features a low EV to sales multiple.
  • Read more about these top small-cap breakout stocks!
Small-Cap Breakout Stocks - 7 Small-Cap Stocks Signaling a Sizeable Breakout

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Small-cap breakout stocks offer plenty of robust upside opportunities, but only for the patient and the adventurous. As with practically anything in life, the greater the reward, the higher the risk. Naturally, this framework implies that you’re likelier to lose out in the long run, even if you conduct your research. Frankly, the lack of predictability among small-capitalization enterprises represents a double-edged sword.

On one hand, nothing quite moves like high potential small-cap stocks (unless we’re talking about micro or even nano-cap trades). With little or even no news, these diminutive enterprises may start lighting up the board. But on the other hand, the aforementioned dynamic works both ways. You might think you’re on solid ground, then boom! Everything collapses.

Still, I’ll say this much about investing in small-cap stocks. If you target undervalued companies whose price action appears poised for a breakout – say, a bounce back from a recent bottom – you might be able to get in before the wave.

It’s a dangerous way to live. If you can handle it, below are small-cap stocks for high returns.

Medifast (MED)

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Based in Maryland, Medifast (NYSE:MED) operates in the health and wellness industry. Specifically, it provides weight loss, weight management and nutritional products and services. Fundamentally, MED represents one of the small-cap breakout stocks because of the underlying burgeoning market. According to Allied Market Research, the weight loss and management sector could hit $295.3 billion by 2027, representing a compound annual growth rate (CAGR) of 7% from 2021.

Unfortunately, investors don’t quite see the opportunity in Medifast. Since the start of the year, shares stumbled more than 20%. Nevertheless, it’s also possible that most folks are missing out on a prime candidate for high potential small-cap stocks. That’s because after dropping to around $79, MED has enjoyed a bounce back. In the trailing month, it gained 12%.

Notably, Medifast benefits from strong revenue and EBITDA growth. As well, it’s a consistently profitable enterprise. Still, it only trades at a trailing multiple of 7.17X, which is incredibly undervalued. For those that want to take a shot, MED could be one of the small-cap stocks for high returns.

Cross Country Healthcare (CCRN)

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Headquartered in Boca Raton, Florida, Cross Country Healthcare (NASDAQ:CCRN) is a leader in providing total talent management including strategic workforce solutions, contingent staffing, permanent placement, and other consultative services for healthcare clients. Notably, the Bureau of Labor Statistics points out that healthcare occupations should grow 13% from 2021 to 2031, much faster than the average for all occupations.

Therefore, Cross Country could make a lucrative sector that much more exciting. Still, Wall Street doesn’t quite see it as one of the small-cap breakout stocks just yet. Instead, CCRN only gained a hair above parity since the January opener. Still, something could be brewing.

After hitting a recent low of $21.38, CCRN has been rising conspicuously. Financially, Cross Country benefits from a stout three-year revenue growth rate (per-share basis) of 48.2%. Its book growth during the same period also impresses at 40.6%.

Still, CCRN only trades at a forward multiple of 11.19. In contrast, the sector median stat is 23.87X. If you’re interested in investing in small-cap stocks that are discounted, Cross Country is worth a look.

Benchmark Electronics (BHE)

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Hailing from Arizona, Benchmark Electronics (NYSE:BHE) provides contract manufacturing services. Per its corporate profile, Benchmark provides comprehensive solutions across the entire product life cycle by leading through its innovative technology and engineering design services, leveraging its optimized global supply chain and delivering world-class manufacturing services. It offers applications in commercial aerospace, defense, industrials, medical and semiconductor capital equipment.

Despite the relevancies, BHE hasn’t quite caught the Street’s attention, shedding more than 1% since the Jan. opener. However, in the past month, shares moved up a bit over 5%. Notably, since hitting a recent low of roughly $21, Benchmark has been steadily marching higher. For those interested in small-cap breakout stocks, BHE should be on your radar.

On a financial note, Benchmark posts decent stats for three-year revenue and EBITDA growth rate, 11.4% and 23.1%, respectively. Also, it’s a consistently profitable enterprise. Even with the solid performances, BHE trades at an enterprise value (EV) to revenue multiple of 0.41. This stat ranks below nearly 84% of its peers. Thus, BHE could be one of the top small-cap breakout stocks.

Select Water Solutions (WTTR)

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Headquartered in Houston, Texas, Select Water Solutions (NYSE:WTTR) is a leading provider of total water management and chemical solutions to the unconventional oil and gas industry in the U.S. Per its public profile, Select provides for the sourcing and transfer of water, both by permanent pipeline and temporary hose, prior to its use in the drilling and completion activities associated with hydraulic fracturing.

As well, it offers complementary water-related services that support oil and gas well completion and production activities. Unfortunately, the present hawkish monetary policy did a number on hydrocarbon-related enterprise. Therefore, WTTR only gained just under a quarter of a percent since the start of the year. Still, Select could rank among the small-cap breakout stocks.

On a fundamental note, hydrocarbons probably won’t go out of style anytime soon because of their high energy density. Plus, as traffic volume exceeds pre-pandemic norms, demand for the underlying sector should improve. Also, WTTR trades at a forward multiple of 9.17. In contrast, the sector median is 15.75X. Thus, it’s one of the bargain high potential small-cap stocks.

Crescent Energy (CRGY)

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Also based in Houston, Crescent Energy (NYSE:CRGY) is a diversified, well capitalized, U.S. independent energy company with a portfolio of assets in key proven basins across the lower 48 states. Since the beginning of this year, CRGY fell nearly 6% of equity value. In the trailing one-year period, CRGY slipped almost 13%. Again, it’s not surprising because of the aforementioned hawkish monetary policy.

Still, I’m a big believer in the traditional energy sector, in part because of cynical reasons. Sure, the political and ideological narrative supports shifting to renewable energy. However, the infrastructure cannot handle a wholesale pivot. We need access to multiple sources of energy and hydrocarbons represent an important cog. Thus, CRGY ranks among the small-cap breakout stocks.

Interestingly, since hitting a recent low of $9.41, Crescent shares have been marching higher. While the company presents a riskier case for those investing in small-cap stocks, CRGY does trade at a forward multiple of 5.78. In contrast, the sector median stat is 8.08X.

Titan (TWI)

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Based in Illinois, Titan (NYSE:TWI) is a leading global manufacturer of off-highway wheels, tires, assemblies, and undercarriage products. Per its public profile, the company globally produces a broad range of products to meet the specifications of original equipment manufacturers (OEMs) and aftermarket customers in the agricultural, earthmoving/construction and consumer markets. Still, it’s a risky idea among small-cap breakout stocks, losing 22% since the Jan. opener.

In the trailing one-year period, TWI doesn’t print that much better of a performance, shedding 16%. Still, on a fundamental note, the global farm equipment market alone may grow from $111.8 million in 2022 to $141.6 billion by 2027. This would represent a CAGR of 4.8%, a decent growth rate given the industry’s maturity.

Looking to the financials, Titan prints a three-year revenue growth rate of 12.2%, above 69.11% of its peers. Also, its EBITDA growth rate impresses during the same period at 89.1%. Lastly, TWI trades at a forward multiple of 6.29. As a discount to projected earnings, Titan ranks better than 93% of sector rivals. Therefore, it’s one of the small-cap stocks for high returns.

Vivid Seats (SEAT)

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Founded in 2001, Vivid Seats (NASDAQ:SEAT) is a leading online ticket marketplace committed to becoming the ultimate partner for connecting fans to the live events, artists and teams they love. Usually, corporate marketing pitches are akin to bovine matter (you know what I’m talking about). However, in this case, Vivid describes itself perfectly. It provides a means for fans to attend live events by putting their money where their mouth is.

Of course, with pop sensation Taylor Swift sparking an uproar about the secondhand market for live event tickets, a perception exists that Vivid Seats is the bad guy. It’s not. As you know, it’s one of the small-cap breakout stocks to buy. But in all seriousness, Vivid implements a quantifiable framework of meritocracy for supposed true fans.

Let’s face it – fandom is difficult to quantify. However, being the highest bidder very much is a quantifiable metric. If you really love Taylor or whatever act, you’re going to pay what the market will bear. Once people start to understand this concept, SEAT could take off. Thus, it’s one of the small-cap stocks for high returns.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2023/07/7-small-cap-stocks-signaling-a-sizeable-breakout/.

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