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7 Small-Cap Growth Stocks to Buy on the Dip

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·6 min read
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Buying stocks on a dip seems a credible investment idea. The goal of investing is to either buy low and sell high, or to sell high — going short — and buy lower to cover your positions. Finding small-cap growth stocks to buy on the dip appear to be riskier than buying large-cap stocks during those pullbacks. But remember that opportunities exist all the time across all industries, sectors and sizes of companies.

These small-cap growth stocks to buy on the dip present not only growth in revenue and EPS, but they have attractive valuations and solid fundamentals.

Buying a stock at a steep discount is worthless if the fundamentals of the company are bad. Such a move is pure speculation with very low odds of success.

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Let’s have a closer look at these small-cap growth stocks to buy on the dip.

AGRO

Adecoagro

$7.80

EZPW

EZCorp

$7.49

METC

Ramaco Resources

$11.78

MX

Magnachip Semiconductor

$16.08

PANL

Pangea Logistics Solutions

$4.76

BXC

Blielinx Holdings

$74.39

BBGI

Beasley Broadcast Group

$1.27

Adecoagro (AGRO)

Image of healty foods laid out on a table.
Image of healty foods laid out on a table.

Source: margouillat photo / Shutterstock.com

Adecoagro (NYSE:AGRO) has developed a sustainable business model producing food and renewable energy, focusing on sugar; ethanol and energy; dairy; rice; and other crops as individual businesses.

The shares of Adecoagro are marginally down in 2022 but have witnessed a three-month selloff of 35%. The firm saw its sales grow by 35.19% in 2021, but this momentum play is all about net income growth.

The firm turned profitable in 2020 after losing money in 2019 and in 2018 reporting a net income of $412,000. Then in 2021, net income increased 31,615.78% to $130.67 million.

A second growth trend you should watch for the firm is the one for free cash flow. In 2019, 2020, and 2021 the free cash flow growth was 141.76%, 207.18%, and 115.92% respectively.

The stock has a forward dividend yield of 2.1% and a one-year target of $14.40 for an upside potential of 80%.

EZCORP (EZPW)

Man buying gold jewellry, pawn shop and us dollar banknotes
Man buying gold jewellry, pawn shop and us dollar banknotes

Source: Miriam Doerr Martin Frommherz via Shutterstock

EZCORP (NASDAQ:EZPW) is “a leading provider of pawn loans in the United States and Latin America.”

Customers of the company can sell goods such as gold and diamond jewelry, electronics, video games, musical instruments and sporting goods to earn cash.

The shares are more or less flat in 2022 and the growth can be seen mostly in EBITDA. The year-over-year EBITDA growth is 216.15% and the firm has also long-term forward EPS growth of 24.5%.

In 2021 the company returned to profitability with net income growth of 112.58% to $8.61 million.

There are more things to like about EZPW stock, like its consistent positive free cash flow generation. This trend is ideal for a higher valuation and for a stock price rebound and rally.

The analysts like the stock, as it has a one-year target of $10.17 or an upside potential of nearly 36%.

Ramaco Resources (METC)

A man holds coal in his hands over a pile of more coal
A man holds coal in his hands over a pile of more coal

Source: Shutterstock

Ramaco Resources (NASDAQ:METC) is a producer of metallurgical coal. The shares have losses of approximately 17% in 2022 but have gains of nearly 88% in the past year.

This stock also has growth in sales, net income, and EBITDA.

Looking at the five-year trend for key financial metrics of METC stocks, we note that sales growth is strong — it increased 67.77% in 2021, and the firm returned to profitability with a net income growth of 910.25% to $39.8 million and a stunning EBITDA growth of 2,677.44% to $66.35.

The firm has also had very strong growth in operating cash flow. The operating cash flow growth YOY has been 1,660.78%, a remarkable figure.

The stock has a forward dividend yield of 4% and a one-year target estimate of $23, an upside potential of 95%.

Magnachip Semiconductor (MX)

In Ultra Modern Electronic Manufacturing Factory Design Engineer in Sterile Coverall Holds Microchip with Gloves and Examines it.
In Ultra Modern Electronic Manufacturing Factory Design Engineer in Sterile Coverall Holds Microchip with Gloves and Examines it.

Source: Shutterstock

Magnachip Semiconductor (NYSE:MX) “designs and manufactures analog and mixed signal semiconductor-based solutions” and its “innovative technologies span a wide range of applications in communications, IoT, consumer, computing, industrial and automotive applications.”

The company has reported growth in several key financial metrics.

The EBITDA growth YOY is 48.84%, the EBIT growth YOY is 58.04% and the operating cash flow growth YoY is 940.38%. The EPS estimate is expected to increase from 79 cents for the fiscal year 2022 to $1.35 in the fiscal year 2023. Estimates for revenue also to increase, to $571.67 million in the fiscal year 2023 from $436.73 million in the fiscal year 2022.

The MX stock has a one-year estimate target of $26 for an upside potential of 61%.

Pangaea Logistics Solutions (PANL)

A photograph of the ocean.
A photograph of the ocean.

Source: Manu Galdamez/ShutterStock.com

Pangaea Logistics Solutions (NASDAQ:PANL) “is a global provider of comprehensive maritime logistics and transportation solutions.”

The firm has also grown in not just one financial metric, but in several, which is very bullish.

The EBITDA growth YOY is 151.56%, the EBIT Growth is 207.96% and diluted EPS growth is 232.53%.

In addition to the above metrics, the sales growth in 2021 was 87.55% to $718 million, and net income surged 492.19% to $67.23 million.

The stock is up nearly 26% in 2022 but has declined about 8% in the one-month period. Having a one-year target estimate of $7.17, the PANL stock could deliver gains of 51%.

BlueLinx Holdings (BXC)

two construction workers on a worksite
two construction workers on a worksite

Source: Shutterstock

BlueLinx Holdings (NYSE:BXC) is one of the largest building products distributors in the U.S. as its “product offering includes more than 10,000 items and 70,000 SKUs.”

This firm has a nice combination of sales and net income growth, the ideal scenario for any business.

The sales growth has been increasing for the past two consecutive years, with growth of 17.44% in 2020 and to 38.09% in 2021. The company has managed to turn these sales into higher net profits in 2020 and in 2021, it reported even higher net income growth than sales growth. When this occurs, investors should pay attention as there is a very positive story.

Net income grew 558.1% in 2020 and additionally 266.13% in 2021. There is more growth to like as the YOY EBIT growth is 138.35% and YOY diluted EPS growth of 146.98%.

There is also growth in free cash flow in 2020 and in 2021 which is highly bullish. The analysts like the stock, as it has a one-year target of $131.25, an upside potential of 74%.

Beasley Broadcast Group (BBGI)

a smartphone lies on a table as cartoon representations of social media, email and text notifications float overhead. social media stocks
a smartphone lies on a table as cartoon representations of social media, email and text notifications float overhead. social media stocks

Source: Shutterstock

Beasley Broadcast Group (NASDAQ:BBGI) “is a multiplatform media company providing advertising and digital marketing solutions across the United States.”

The firm has reported YOY revenue growth of 26.55%, and YOY EBITDA growth of 111.57%. On top of this, the good news is that the forward EBITDA growth is expected to be 73.72%.

The firm has also managed to narrow its net losses significantly in 2021 after a rough 2020. The first quarter of 2022 was a strong one as there was a beat on both EPS and revenue.

This is a bullish factor that could soon lead to a rebound in the stock price. The BBGI stock has losses of nearly 33% in 2022, but assuming the one-year target of $3 is met then there is a potential upside of 138%.

On the date of publication, Stavros Georgiadis, CFA  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.

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