The Federal Reserve’s higher-for-longer interest rate policies are weighing on small-cap stocks. The Russell 2000 index, which consists of the 2,000 smallest stocks on the market, is up just 1.6% in 2024. In comparison, the S&P 500, which is the 500 largest companies, is up nearly 10%.

That’s because high interest rates affect small businesses much more harshly than their larger counterparts. Small-cap access to financing becomes more expensive, consuming a larger percentage of scarce resources than it does for bigger businesses.

Laboring under this regime even as inflation marches higher is a one-two punch to these companies. Yet some small-cap stocks are proving resilient. Below are seven small-cap stocks to buy that are proving unstoppable even though they fight with one hand tied behind their backs.

Cactus (WHD)

Oilfield services company Cactus (NYSE:WHD) is proving a prickly rival to its larger brethren Baker Hughes (NASDAQ:BKR), Halliburton (NYSE:HAL) and SLB (NYSE:SLB). The company sells pressure control equipment for wellheads as well as spoolable pipe and fittings, or flexible pipe that can be wound on a spool.

Although Cactus is operating in a seasonally slow period for the oil and gas industry, the services firm was able to report stronger-than-expected revenue though earnings were slightly weaker in the first quarter. Yet Cactus spoolable technologies business was able to see better growth as larger customers bought more product. It anticipates the pressure control business will remain slow for the foreseeable future though it believes its latest product introductions could offset the slack.

Industry production, while weak now, has a long-term upward bias. Demand for fossil fuels continues to grow, which ensures oil and gas production will remain elevated and expand. Although the number of rigs in operation is down from the industry’s recent high in 2022, according to Baker Hughes, expect it to grow in the future and carry Cactus higher with it.

Benchmark Electronics (BHE)

Benchmark Electronics (NYSE:BHE) is riding the semiconductor wave higher. Providing design and manufacturing services to a diverse customer base across semiconductors, aerospace, medical and more, Benchmark saw semiconductor capital equipment sales, its largest segment, jump 12% year over year to $165.9 million. Aerospace and defense, however, surged 33% to $105.8 million. Overall, though, Benchmark Electronics’ revenue was down 2.7% as medical, telecom and complex industrials saw sharp declines.

Yet this exceeded analyst expectations, as did adjusted earnings of 55 cents per share. Wall Street had forecast $645 million in sales and 46 cents in earnings. Benchmark Electronics stock is up 33% on the report as it delivered its fourth consecutive quarter of positive cash flow from operations and free cash flow (FCF), which stood at $43 million.

Although BHE’s medical business was down this quarter, it secured new customers that should materially boost sales going forward. It was the same situation in the semiconductor space. While this year isn’t expected to be materially strong, Benchmark is looking for the money that flows from the CHIPS Act to trickle down to greater capital expenditures. The belief is this company could see some big wins in 2025 and beyond..

Columbus McKinnon (CMCO)

Columbus McKinnon (NASDAQ:CMCO) might not be a household name but it is the country’s largest manufacturer of hoists, cranes, actuators and other rigging tools. Despite a challenging market, the company has seen better-than-expected results even as it has faced higher one-off costs. It is due to report fourth-quarter earnings, which should confirm the business is expanding.

Columbus McKinnon completed a state-of-the-art facility last quarter that expands its capacity and will lower costs over time. With about $1 billion in annual sales, the company is looking to double sales to $2 billion within five years.

Some of that growth is tied to the electric vehicle (EV) industry, which might become a headwind if the market for EVs continues to slow. Still, record numbers of EVs are being built and the preference from buyers for hybrids should alter the overall growth trajectory of the business.

Columbus McKinnon stock is up 13% year-to-date, outpacing the index and the overall stock market. As it also pays a modest dividend that yields 0.6% annually, CMCO stock may be a small-cap stock to buy in May.

Land’s End (LE)

Retailer Land’s End (NASDAQ:LE) is on a tear. Its stock roared 67% higher after reporting earnings in March and the stock is up well over 120% since November 2023. The reason for the gains is Land’s End has a plan for profitability that is coming to fruition.

Gross profits in the fourth quarter grew 14% while margins improved 550 basis points allowing for a 31% improvement in adjusted EBITDA. For the full fiscal year, Land’s End reported a net loss of $131 million, or $4.09 per share. On an adjusted basis, the net loss was just $5 million, or 15 cents per share.

But 2024 is expected to be a turning point for the retailer. Management is looking for profits to appear with adjusted net income in a range of $3 million to $12 million, or 10 cents to 38 cents per share. That’s a pretty wide gap allowing for many different outcomes, but they all point to an improving picture for Land’s End. 

PubMatic (PUBM)

Cloud-based programmatic ad tech platform PubMatic (NASDAQ:PUBM) is the next small-cap stock to buy because of an improved environment. We’ve seen the results from the likes of Meta Platforms (NASDAQ:META), Google and other large ad-reliant businesses witnesings a large influx of ad spending. PubMatic’s increased focus on digital delivery is boosting growth and causing customers to spend more with it.

In the first quarter PuMatic reported net dollar-based retention (NDBR) grew to 106% from 105% a year ago. That’s the amount of money existing customers spend with the company growing from one year to the next. During the quarter, omnichannel video sales, which includes connected TV (CTV), jumped 33% from last year.

That helped PubMatic swing from a year-ago loss of a penny per share to a profit of 9 cents this time around. With $174 million in cash, equivalents and short-term investments, coupled with no debt, the ad tech platform is a lean operation that should continue benefitting from the ongoing shift of advertising dollars to digital formats.

Select Medical Holdings (SEM)

Pennsylvania-based healthcare stock Select Medical Holdings (NYSE:SEM) provides  long-term acute care and inpatient rehabilitation hospitals, along with occupational health and physical therapy clinics. However, the occupational health business will be spun off by the end of the year into a new, separately traded company called Concentra.

While details of the spinoff are not yet available, Concentra operates 544 occupational health centers and 150 onsite clinics at employer worksites in 42 states. Select Medical acquired the business in 2015 from Humana (NYSE:HUM) for just under $1.1 billion in partnership with private equity firm Welsh, Carson, Anderson & Stowe.

Select Medical’s acute care and rehab business, though, is growing strong and first-quarter results far exceeded even management’s expectations. Revenue was up 10% for the period generating a 51% increase in adjusted EBITDA. That should accelerate in future quarters after the separation as management can focus attention and resources on its core operations. 

Universal (UVV)

Universal (NYSE:UVV) is the world’s largest tobacco leaf supplier, operating in 30 countries around the globe. It supplies all three major U.S. cigarette makers but also China Tobacco International the world’s biggest cigarette maker.

That’s key because although the U.S. smoking rates are in a secular decline, only 5% of the world’s cigarettes are sold in the U.S. China is the largest market where 46% of the global supply is sold. China Tobacco controls 96% of the cigarette market there. So investors wondering whether there is a long-term growth story for Universal need only look outside the U.S. to see the tobacco market remains a viable industry.

An equally attractive reason for buying this small-cap stock is its dividend. Universal’s payout of $3.20 per share yields 5.9% annually. The tobacco trader has also increased the dividend for 50 consecutive years making it a Dividend King. 

Business remains robust with 92% of its leaf inventory already committed. Because it is a commodity supplies can fluctuate year-to-year and Universal warns the El Nino atmospheric effect could play a role in making supplies tight, its diversified global footprint should allow it to operate profitably without hindrance.

Universal also has a small food ingredients business that is growing, but it only accounts for about 12% of revenue. It could become a more meaningful segment over time, but expect tobacco leaf sales to be the main profit-maker for the company.

On the date of publication, Rich Duprey did not hold (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.