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7 Small-Cap Sleeper Stocks to Buy Before Wall Street Wakes Up

For those that consider themselves the ultimate contrarians, they may want to target certain small-cap sleeper stocks to buy. And believe me, we are talking about true contrarianism. According to a recent MarketWatch article, big investors favor large-capitalization firms to take them home for the rest of 2022. That’s smart thinking — but it’s also the obvious pathway.

For the adventurous types, small-cap sleeper stocks to buy may be the only way to go. Offering tremendous upside potential, these under-the-radar market ideas just might surprise some folks. Any bit of good news could disproportionately facilitate robust moves, whereas the same magnitude of positivity might not move the blue chips that much.

Still, please be aware that smaller firms present bigger risks due to issues such as financial stability (or lack thereof). Nevertheless, if you can handle the heat, below are small-cap sleeper stocks to buy before Wall Street wakes up.

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AVNW

Aviat Networks

$28.29

CRMT

America’s Car-Mart

$69.09

MCRI

Monarch Casino & Resort

$57.47

MGPI

MGP Ingredients

$102.21

GRWG

GrowGeneration

$3.71

AMRK

A-Mark Precious Metals

$27.71

CSV

Carriage Services

$32.93

Aviat Networks (AVNW)

an illuminated earth seen from space simulating satellite interconnectivity
an illuminated earth seen from space simulating satellite interconnectivity

Source: Shutterstock

A global provider of microwave transport and backhaul solutions, Aviat Networks (NASDAQ:AVNW) provides public and private operators with communications infrastructure. This is to accommodate internet protocol (IP)-centric multi-gigabit data services.

At the time of writing, AVNW finds itself down 12% on a year-to-date (YTD) basis. The company features a market capitalization of just under $316 million, making it one of the smaller of the small-cap sleeper stocks.

Fundamentally, Aviat draws significant relevance because of the 5G rollout. One of the company’s innovations is the development and distribution of multi-band radio technologies — which combine microwave and E-band in a single box — to overcome challenges associated with fiber-based 5G connections.

Presently, Gurufocus.com labels AVNW as fairly valued. One factor to consider is that despite the company’s small size, it features a solid balance sheet. A notable highlight centers on its cash-to-debt ratio, which stands at 16.3.

America’s Car-Mart (CRMT)

assortment of cars in a parking lot
assortment of cars in a parking lot

Source: Shutterstock

A used-car dealership, America’s Car-Mart (NASDAQ:CRMT) focuses on “delivering quality, used vehicles at affordable prices,” per its website. Currently, the company operates 154 automotive dealerships in 12 states. Primarily, these dealerships are located in the middle of the country.

As I write this, America’s Car-Mart features a market cap of just about $440 million. Since the start of this year, CRMT has dropped 33%, which isn’t too surprising. Given rising concerns of a recession, along with soaring inflation throughout 2022, many auto dealerships struggled. Still, CRMT could be one of the small-cap sleeper stocks to buy.

Though it might seem unintuitive because car purchases feature an element of discretionary sentiment, they’re also necessary. For instance, many parts of Southern California require personal vehicles, as public transportation networks simply don’t match the conveniences and range of East Coast metropolitan areas. As well, the increasing rise of the return-to-office movement could bolster auto sales.

While Gurufocus.com warns that CRMT could be a value trap, it’s possible this metric could have been “erroneously” sparked by manufacturing and supply chain issues, which then created spillover issues for used vehicles.

Monarch Casino & Resort (MCRI)

a room of slot machines in a casino to represent gambling stocks
a room of slot machines in a casino to represent gambling stocks

Source: Shutterstock

A self-explanatory business, Monarch Casino & Resort (NASDAQ:MCRI) provides comprehensive entertainment through gaming, dining and hospitality amenities. Through its subsidiaries, Monarch owns and operates the Atlantis Casino Resort Spa, a hotel/casino facility in Reno, Nevada, and the Monarch Casino Resort Spa in Black Hawk, Colorado, approximately 40 miles west of Denver.

At the conclusion of the Sept. 27 session, Monarch featured a market cap of $1.05 billion. MCRI struggled throughout this year, shedding nearly 24% YTD. Still, MCRI could be one of the small-cap sleeper stocks to buy for contrarian gamblers.

Fundamentally, Monarch benefits from the cheap entertainment thesis. As soaring demand for recreational vehicles demonstrated during the worst of the coronavirus pandemic, Americans love vacations. When confronted with an obstacle, they will merely find alternative ways to vacation. For Monarch, the company offers a relatively cheaper (and domestic) solution.

Just as importantly, Gurufocus.com labels MCRI as significantly undervalued. Monarch commands excellent longer-term growth and profitability metrics, yet it remains largely overlooked. Don’t make the same mistake as this one of the small-cap sleeper stocks that probably won’t be discounted forever.

MGP Ingredients (MGPI)

On a white table sits bowls of nuts, fruit, and seeds, while vegetables like brocolli, carrots, and mushrooms sit on the table
On a white table sits bowls of nuts, fruit, and seeds, while vegetables like brocolli, carrots, and mushrooms sit on the table

Source: Tatjana Baibakova / Shutterstock

A food ingredients and distilled spirits specialist, MGP Ingredients (NASDAQ:MGPI) brings an intriguing narrative to the table. With stress levels likely to rise because of economic hardships, imbibing frequencies could also increase. It’s a debatable topic but one that might materialize in the future.

Following the closing bell of the Sept. 27 session, MGP Ingredients printed a market cap of $2.22 billion. A bit higher than the other small-cap sleeper stocks on this list, I’m just going to cheat on this one. Moreover, while MGPI’s 20% YTD gain wouldn’t ordinarily qualify as a “sleeper,” shares have slipped nearly 8% in the trailing week. Again, I’ll just have to cheat a little here.

Still, those looking for cynical wagers among small-cap sleeper stocks to buy should put MGP on their radar. Financially, the company continues to bring it despite significant economic challenges. In the second quarter of 2022, the company posted revenue growth of 11.5% against the year-ago level. As well, it posted growth in net income of 27.4%.

GrowGeneration (GRWG)

Cannabis leaves and stems are grown hydroponically in the garden.
Cannabis leaves and stems are grown hydroponically in the garden.

Source: LuYago / Shutterstock.com

A botanical specialist, GrowGeneration (NASDAQ:GRWG) bills itself as the “nation’s largest hydroponic store and organic garden center supplier.” Specifically, GrowGeneration sells hydroponic supplies, commercial grow lights and more. Basically, the company has everything to feed all your botanical desires.

To be clear, GrowGeneration represents a perfectly legitimate business for regular botanical needs. However, it also caters to botanical demand for marijuana growers as well. Presently, GRWG features a market cap of $214.6 million. Since the start of the year, GRWG has hemorrhaged roughly 72% of value. This means it will be one of the riskiest small-cap sleeper stocks to buy. Still, some components of the fundamentals may be enticing.

Gurufocus.com labels GRWG a possible value trap, partially because of its poor Q2 performance. However, GrowGeneration looks interesting for speculators.

A-Mark Precious Metals (AMRK)

Close-up of a gold-ingot on top of a troy ounce silver and palladium bar. Precious metals. Gold, silver, palladium.
Close-up of a gold-ingot on top of a troy ounce silver and palladium bar. Precious metals. Gold, silver, palladium.

Source: corlaffra / Shutterstock

A trading desk specializing in commodities of intrinsic value, A-Mark Precious Metals (NASDAQ:AMRK) is next on my list. Per its website, “A-Mark operates a fully-integrated precious metals platform that includes a portfolio of leading Direct-to-Consumer brands, service companies focused on Logistics, Storage & Minting and a Collateralized Lender.”

At time of writing, AMRK features a market cap of a bit under $627 million. AMRK has declined 9.5% YTD, which isn’t bad considering the deflationary pivot that the Federal Reserve sparked this year.

Fundamentally, A-Mark surprisingly brings a lot to the table, making it one of the small-cap sleeper stocks to buy. That’s because precious metals dealers have almost no parallel in terms of marketing wizardry. Distributing content about the delta between gold’s “paper” price and “physical” price — here, you probably thought the price was the price — there is no business like the precious metals business.

Further, against traditional metrics, AMRK represents an undervalued profile. Its forward price-earnings ratio sits at 4.5 times, well below the capital markets’ median of 12.5 times.

Carriage Services (CSV)

A funeral scene with casket and flowers.
A funeral scene with casket and flowers.

Source: Shutterstock

Providing both a euphemistic and literal meaning simultaneously, Carriage Services (NYSE:CSV) does indeed carry. It also provides services. However, we’re talking about final arrangement-type of services, which isn’t exactly everyone’s favorite topic. But since we’ve already crossed the Rubicon of cynicism, let’s just dive in.

At the moment, Carriage Services features a market cap of a bit over $464 million. CSV stock shed nearly 49% YTD, meaning that it technically qualifies as one of the small-cap sleeper stocks. But should you actually buy it? Of course, the decision is entirely yours, since I’m merely presenting ideas. Fundamentally, though, it could be enticing.

From an investment standpoint, Gurufocus.com considers GSV modestly undervalued. The underlying firm features excellent growth and profitability metrics.

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.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.

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