Small-cap stocks offer significant benefits to investors, particularly regarding growth potential and access to companies with room for substantial expansion. Unlike large-cap firms constrained by size, small caps can innovate and proliferate, potentially becoming the next major market players.
Because significant mutual funds and institutions typically overlook small-cap stocks due to size limitations, individual investors have a unique opportunity to identify promising companies early and capitalize on their growth before institutional interest drives up prices. Furthermore, small-cap value index funds have historically outperformed the S&P 500, providing a safer and potentially higher-return investment strategy than individual large-cap stocks.
Investing in small-cap stocks benefits your portfolio; the only trouble is finding the best ones to invest in. The threecompanies below all offer enormous growth and profit opportunities. Given that Wall Street has not picked up on them yet, it gives you a perfect chance to score a discount. Invest in them now!
Titan Machinery (TITN)
Titan Machinery (NASDAQ:TITN) is a diverse group of agricultural and construction equipment dealerships in the Upper Midwest. It also offers shoreline equipment to satisfy particular customer and specialty product requirements. TITN has 22.85 million shares outstanding.
The company has been low on investor’s radar due to the decrease in share price over the years. Some 22 Yahoo Finance analysts have a consensus stock price of $31.80 with a low of $24.00 and a high of $40.00 with the current price at $22.42.
Titan’s acquisition of Scott Supply will propel its presence in South Dakota. With Scott Supply’s $40 million in annual revenue will help pad the total $2.1 billion in sales Titan posted last year. The century-long commitment from both companies to service excellence will ensure reliability in the future. This strategic move to enhance TITN’s vision for growth and enhanced customer satisfaction will bolster stock prices.
With a solid commitment to diversity and excellence, TITN stands poised for growth. Despite recent market fluctuations, the Scott Supply acquisition signals a strategic leap forward, bolstering Titan’s foothold in critical markets and promising enhanced profitability.
AECOM (ACM)
AECOM (NYSE:ACM) is a multinational infrastructure consulting firm with environmental and climate specialties. It trades at around $94 a share and has grown 16.50% year over year.
ACM’s market cap grew by 1.78% from $12.56 billion to $12.79 billion from 2023 to 2024. The asset turnover ratio was promising at 1.31x, or 66.37% more than the sector median of 0.79x. Levered free cash flow growth was outstanding at 39.87%, or 45.86% more than the sector median of 27.33%. Overall, these metrics convey profitability and growth prospects, both long-term and short-term, depicting ACM as a quality company.
The industrial products and services market will be valued at $0.97 trillion in 2024, with a growth CAGR of 3.19% from 2024 to 2028. Key factors contributing to this growth include urbanization and breakthroughs in the field.
As of Apr. 1, ACM has signed a five-year contract with NASA to provide environmental restoration and compliance services for its facilities across the country, showing trust by federal institutions. The deal gives the company credibility and indicates similar deals to be approached in the future, leading to an influx in revenue. I expect ACM’s stock to appreciate shortly so that I will give this small-cap stock a “Buy” rating.
Upwork (UPWK)
Upwork (NASDAQ:UPWK) is an American freelancing platform for business development and independent company talent contracting. Valued at $12.99, UPWK has been undervalued for a while, though it recently saw a yearly increase of 47.61%. Though it is centered in a profitable industry, it only has a market cap of $1.7 billion.
The current state of the freelancing industry has a strong standing in the current market but has large amounts of potential upside, which Upwork could capitalize on. Valued in 2022 at $4.9 billion in revenue, industry experts expect the market to jump to $11.8 billion by 2028. This large-scale forecast, doubling revenue in around five years, grants the sector a CAGR of 15.5%.
Upwork reported a strong financial outing in Q4 2023 and positive outlooks for Q1 2024. UPWK reported $183.9 million in the revenue department or a 13.93% increase year over year. Further, immense growth was noted in both net income and diluted EPS. UPWK brought in $17.37 million and 12 cents in these categories, respectively, showing fantastic growth of 192% YoY.
Though workers are apprehensive about their jobs being replaced by AI, Upwork integrated it into its platform, Uma. Being fully implemented in the upcoming quarters, this technological power is expected to aid Upwork in business development and freelancing jobs, increasing the company’s market reach and individual appeal. Upwork expects to increase its overall presence in the freelancing industry with this new automated power.
On the date of publication, Michael Que 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.
The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
