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9 Up-and-Coming Small-Cap Stocks to Watch

Fly under the radar and score huge returns with these small companies

Source: Shutterstock

With another year in the books, it’s astonishing that the broader markets are again near all-time highs. Just from gambling on probabilities, you’d expect the major indices to have at least modestly corrected by now. As it stands, many investors are gun shy about betting on large-capitalization companies. To offer an alternative, may I suggest some small-cap stocks to watch?

One of the distinct advantages of small-cap stocks is that they typically fly under the radar. Most folks are well familiar with Dow Jones companies like Apple (NASDAQ:AAPL) or Nike (NYSE:NKE). However, not as many investors pay attention to the lesser-capitalized names. Of course, on one hand, this is a disadvantage. But on the other hand, when broader selloffs occur, you’d expect the marquee names to take a bath.

Naturally, during a wide-scale correction, all publicly traded companies are suspect. However, the second reason to consider small-cap stocks to watch is their upside potential. Because they’re often starting off from a lower vantage point, small caps have higher growth potential. But the large caps are large for a reason. And should these big boys tumble, it’s arguably tougher (and takes longer) for them to recover.

Finally, there’s an intrinsic satisfaction with small-cap stocks to watch. Some folks just can’t stand following the masses. For them, these smaller companies may require a bit more research to discover. But find the right one and the rewards are tremendous, both from a profitability and personal perspective.

With that, let’s turn to nine small-cap stocks to watch.

PetIQ (PETQ)

9 Up-and-Coming Small-Cap Stocks to Watch: PetQ
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Americans love their pets. In fact, you can make an argument that Americans love their pets more than they love their guns. And that, my friends, is true love indeed! According to SurveyMonkey.com, 96% of Americans “have had an animal of some sort at some point in their life.” This demand is what drives PetIQ (NASDAQ:PETQ) and PETQ stock.

Specializing in pet health and wellness products, along with veterinary services via the many retail channels in the U.S., I couldn’t think of a more relevant name among up-and-coming small-cap stocks to watch than PETQ stock. Annually, American families spend about $70 billion on their pets and much of that is attributed to their care.

iRobot (IRBT)

9 Up-and-Coming Small-Cap Stocks to Watch iRobot
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Although I haven’t been the most supportive of iRobot (NASDAQ:IRBT) in the past, I think the recent decline in IRBT stock may offer an opportunity for contrarian investors. According to economist Tyler Cowen, Americans have become lazy. Moreover, he states that this problem may get worse because of technology. And that’s a big reason to consider IRBT stock.

Why, you may ask? Cowen notes that advancing consumer innovations – such as Amazon’s (NASDAQ:AMZN) all-encompassing e-commerce experience – makes us complacent. Really, what could drive more complacency than an automated vacuum cleaner? Of course, that’s iRobot’s specialty, which makes IRBT stock an intriguing pick considering its 2019 disappointment.

Personalis (PSNL)

9 Up-and-Coming Small-Cap Stocks to Watch
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It’s a word that no one wants to hear. Every year, doctors will diagnose about 1.7 million new cancer cases in the U.S. Worse yet, more than 600,000 die from the disease. However, biotechnology company Personalis (NASDAQ:PSNL) may eventually offer viable, practical hope to millions of patients. Thus, PSNL stock is one of the “feel-good” small-cap stocks to watch.

I’ve always been darkly amused by the current scorched earth approach of traditional cancer treatments. Tools such as radiation and chemotherapy destroy cancerous cells but also kill the normal ones naturally fighting the disease. Surely, there must be a better way and that’s where Personalis comes in.

Utilizing groundbreaking molecular-level technologies, Personalis works with pharmaceutical companies to essentially tailor fit cancer therapies. Theoretically, this should help promote effective, precision treatments that are considerably less taxing than traditional solutions. You should definitely keep PSNL stock in your list of stocks to watch.

Kura Sushi USA (KRUS)

9 Up-and-Coming Small-Cap Stocks to Watch
Source: Shutterstock

Typically, small-cap stocks plying their trade in the restaurant industry don’t offer prospective buyers much confidence. With the crowded eatery space, the chances for lasting, meaningful success are minimal. That said, I’d pay close attention to Kura Sushi USA (NASDAQ:KRUS).

Many years ago, most folks viewed sushi as a purely ethnic, exotic food with limited appeal to the non-Japanese demographic. As anyone living in a major metropolitan area can attest, that attitude has shifted dramatically. Now, society views sushi as a culinary delight for progressive, educated people. Naturally, this is a plus for KRUS stock.

The other catalyst? Unlike other traditional restaurants, Kura Sushi utilizes the revolving sushi bar platform. Having tried it myself, I can attest this is a fun treat for the uninitiated. However, the only drawback is that in peak hours, you’re going to wait hours to get inside. Which, I suppose is a huge positive for KRUS stock.

Zuora (ZUO)

9 Up-and-Coming Small-Cap Stocks to Watch: ZUO
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Prior to the modern digitalization-of-everything era, buying software was much like buying anything else: you bought the product once and you never bought it again until it was fully used or consumed. But that has changed markedly in recent years. Now, subscription-based services are the norm with software and other applications. And this is the reason why Zuora (NYSE:ZUO) and ZUO stock came about.

One of the big challenges behind such subscription services is keeping track of all the “paperwork.” Unlike a traditional retail exchange, it’s not a “buy one and done” deal. Instead, it’s a recurring revenue source and keeping track of the fine details can be cumbersome.

To address this need, Zuora specializes in streamlining these background duties for its client companies. Therefore, the client can focus on expanding their business while Zuora takes care of the rest. Considering this platform’s growing relevancy, I like my chances with ZUO stock.

Fastly (FSLY)

9 Up-and-Coming Small-Cap Stocks to Watch: FSLY
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With cloud computing dominating the broader tech ecosystem, it’s no surprise that many names among small-cap stocks to watch are levered to this burgeoning industry. But as we move forward, mere participation in the cloud won’t be enough of a distinguishing factor. Instead, demand will shift toward companies like Fastly (NYSE:FSLY), which offer tangible and practical benefits to client companies. By logical deduction, this should benefit FSLY stock.

Fastly specializes in what they term “edge cloud platform.” Essentially, this concept entails bringing cloud applications closer to the end-user, enabling faster and more reliable data transactions. While it might seem like a minor detail, speed is everything in this digitalized economy. After all, nothing frustrates a would-be consumer than slow, cumbersome access. The ability to improve the provider-user interface makes FSLY stock a compelling buy.

Shockwave Medical (SWAV)

9 Up-and-Coming Small-Cap Stocks to Watch: SWAV
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Given the lucrative opportunities in the biotech space, many if not most small-cap stocks to watch have healthcare exposure. However, the sector is also very volatile, giving investors pause. Still, I’m intrigued with what Shockwave Medical (NASDAQ:SWAV) has to offer.

Utilizing sound waves, Shockwave devices break up calcification in the arteries. From what I understand, this is one of the least intensive methods of addressing calcification yet is incredibly effective. Just as well, the patient doesn’t have to endure the complications of traditional surgeries. As a result, SWAV stock has the potential to be one of the most groundbreaking small-cap stocks.

Furthermore, Shockwave can meaningfully disrupt the surgical industry, which until this innovation came around, was usually the only way to resolve arterial calcification. If you can handle the possible wildness in shares, SWAV stock is one to watch carefully.

Monopar Therapeutics (MNPR)

9 Up-and-Coming Small-Cap Stocks to Watch: MNPR
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As I mentioned earlier, cancer is a scourge on our society, causing unthinkable pain to millions of families. But what makes this disease even more pernicious is its exponential factor: the longer you wait to get diagnosed, the harder it is to meaningfully address it. Here, Monopar Therapeutics (NASDAQ:MNPR) may offer a game-changing solution.

Monopar specializes in developing treatments for advanced cancer. This is a cold, clinical term to describe cancer that has spread from its primary site to other areas. Previously, advanced cancer was a death sentence because other organs and systems are now at risk. Hence, it’s no exaggeration to say that lives are banking on MNPR stock.

From a purely investment perspective, though, MNPR stock just recently had its initial public offering. Therefore, Monopar is one of the more speculative small-cap stocks to watch.

Canaan (CAN)

9 Up-and-Coming Small-Cap Stocks to Watch: CAN
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If Canaan (NASDAQ:CAN) had its IPO at the end of 2016, we could be talking about one of the largest mid-tier companies in the world. That’s because Canaan specializes in processors and systems optimized for blockchain-based applications. While blockchain is still a huge topic right now, it was even bigger throughout 2017 thanks to the cryptocurrency bubble.

Nevertheless, CAN stock should enjoy robust upside irrespective of the wild virtual currency market. More companies are incorporating blockchain technology for legitimate, non-speculative purposes. Additionally, Canaan offers system solutions for artificial intelligence platforms, which is always a plus.

And while we’re on the subject, it seems like cryptocurrencies have started rallying again. Some folks see an even bigger bubble than the one we experienced a few years back. If so, CAN stock might enjoy some crazy gains.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.


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