7 Small-Cap Stocks With Significant Upside Potential in 2024
Investing in small-cap stocks offers multiple advantages for those looking to diversify their portfolios with potential high-growth opportunities efficiently. Small-cap stocks strike a unique balance between the relatively nascent microcap sphere and the more mature mid and large-cap segments. They boast the established foundations needed for stability yet remain agile enough to promise significant long and medium-term growth prospects. This category is especially appealing because these companies, still in their growth phases, are primed to deliver superior returns compared to their larger counterparts.
Small-cap stocks present a golden opportunity for investors to discover undervalued market players, often overlooked by analysts, and invest in the early stages of what could be tomorrow’s industry leaders. Despite their inherent volatility, these stocks are key to achieving a well-rounded, growth-oriented investment strategy that can effectively outperform the broader market over time.
Small-Cap Stocks To Buy: Dorian (LPG)
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Dorian (NYSE:LPG) efficiently sails through the lucrative waters of liquefied petroleum gas transportation with remarkable aplomb, with its fleet of 25 large gas carriers (VLGCs), boasting a combined capacity of 2.1 million cubic meters. This powerful asset base positions the firm to efficiently capitalize on the growing demand and prices of fuel products, underlining its prowess in navigating the dynamics of global energy markets.
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In an enviable display of operational excellence, Dorian LPG reported a near-record time charter equivalent (TCE) of $76,337 per day during the third quarter, a testament to its robust market positioning and savvy business strategy. This remarkable performance resulted in an adjusted EBITDA of $133 million, the highest in its history. Moreover, LPG stock trades at a remarkable 4.6 times Non-GAAP forward earnings estimates, roughly 52.6% lower than its 5-year average. Additionally, the stock is up almost 49% in the past six months, which makes it an excellent time to add it to your portfolios.
Zymeworks’ (ZYME)
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Zymeworks’ (NASDAQ:ZYME) is a true trailblazer in the biopharmaceutical sector with a keen focus on cancer treatment innovations. Through its strategic partnerships, including a major collaboration with Johnson & Johnson (NYSE:JNJ), the company is advancing its presence in preclinical and phase one trials, showcasing its commitment to revolutionizing cancer care. Moreover, the recent earnings report for the third quarter paints a promising picture of Zymeworks’ trajectory, with total revenue skyrocketing more than sixfold along with a 40% reduction in net loss compared to the prior-year period.
Furthermore, this financial uptrend is underpinned by an impressive cash reserve of $295 million against a minimal debt load of $26 million. Additionally, this substantial funding ensures the company’s ability to sustain operations with more than 10 quarters of cash burn at the current rate. The recent surge in share price by over 40% in the last six months underscores the market’s growing confidence in Zymeworks’ earnings growth and product rollout strategy, positioning as a strong player in its lucrative niche.
Ammo Inc (POWW)
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Ammo Inc (NASDAQ:POWW) stands out as a stock with explosive return potential, navigating the volatile penny stock landscape with a remarkably promising outlook. Amid the aftermath of global conflicts, such as the Russia-Ukraine crisis, the company is positioned well to capitalize on the urgent need for ammunition replenishment that governments face globally. With a substantial retail market to tap into, Ammo is setting the stage for significant growth despite economic fluctuations.
The recent geopolitical tensions have effectively shed light on a critical oversight which is the severe neglect of ammunition and artillery stockpiles by NATO allies. With estimates suggesting a monumental effort spanning years, to rebuild these vital reserves, Ammo Inc. finds itself at the center of a burgeoning demand. This scenario is further amplified by comments from the Pew Research Center which show that firearms are part of the cultural fabric of the U.S., Additionally, the U.S. political landscape could further amplify demand for Ammo directly or indirectly boosting firearm sales
Bank of Butterfield’s (NTB)
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Bank of Butterfield’s (NYSE:NTB) , based in Bermuda, continues to shine as a beacon for investors seeking high-yield dividend opportunities. With a forward dividend yield of 6%, NTB presents an attractive long-term proposition for those looking to diversify their portfolios with a stock offering substantial income potential along with significant capital appreciation. This allure is magnified by the bank’s trading metrics, boasting an enticing valuation at just 6.3 times forward earnings, suggesting a bargain entry point for investors.
In its latest financial disclosures, NTB demonstrated commendable performance, with a Q4 Non-GAAP EPS of $1.15, surpassing estimates by four cents. This result is further augmented by a revenue of $144.9 million, marking a slight decrease of 2.4% year-over-year, while managing to exceed expectations by $3.56 million. Such figures are indicative of the bank’s robust operational efficiency and its ability to navigate the financial landscape effectively. Notably, NTB’s financial health is underscored by an impressive return on average common equity of 22.5% and an even more remarkable core return on average tangible common equity of 25.4%.
Arcos Dorados (ARCO)
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Arcos Dorados (NYSE:ARCO), the largest McDonald’s franchisee globally, presents itself as a beacon of resilience and growth in the restaurant sector. With an expansive footprint of more than 2,300 outlets across Latin America, ARCO has navigated through testing times, including the devastating impacts of the pandemic, to emerge even stronger. This rebound is a testament to the company’s impressive operational strategies and its unwavering commitment to top-line expansion.
Financially, ARCO is on an impressive trajectory. The company’s latest quarterly report reveals revenue of $1.1 billion, marking a 22% bump year-over-year and outperforming expectations by $36.6 million. The earnings per share also blew past forecasts at 28 cents, evidencing the company’s strong financial health and operational efficiency. With plans to aggressively expand by opening 80 to 90 new locations in 2024, ARCO’s growth prospects appear bright. Moreover, the company’s substantial cash reserves of over $250 million and a profit of $60 million in the last quarter alone provide solid reassurance of its ability to manage debt effectively.
Build-A-Bear Workshop (BBW)
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St. Louis, Missouri-based Build-A-Bear Workshop (NYSE:BBW), renowned for its personalized teddy bears and other stuffed animals, offers an incredibly interactive experience which distinguishes it in the retail sphere. It operates in a sector that is expected to grow by 4.5% through 2028, from its lofty valuation of $24.3 billion in 2028.
BBW’s financial health is particularly impressive, with EBITDA Growth year-over-year soaring at 19.06%, starkly contrasts with the sector median of -1.63%. This superb performance indicates a significant turnaround and underscores BBW’s operational efficiency and profitability. Moreover, the company’s revenue growth further solidifies its market position, registering a 6.4% year-over-year increase while surpassing the sector median by 41%. Looking ahead, BBW’s forward EBITDA growth is expected to remain robust at 10.3%, which is 271.4% above the sector median, highlighting the company’s promising growth trajectory.
Ring Energy (REI)
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Ring Energy (NYSEMKT:REI), a forerunner in the independent oil and natural gas exploration and production space, operates with impressive acumen across Texas and New Mexico. This company distinguishes itself by a commitment to financial prudence, mainly through debt reduction and shrewdly timed acquisitions. Such measures have not only fortified its balance sheet but also poised Ring Energy for augmented cash flow through increased oil production.
The company’s financial metrics narrate a tale of stability in the past year. With a debt-to-equity range that has seen a low of 0.04, and a median of 0.67, its current debt-to-equity ratio stands at 0.59 mirrors this judicious financial philosophy. Moreover, an EBITDA margin of 55.86% trailing-twelve-month significantly outperforms the sector median by 21.25%, complemented by a net income margin TTM of 19.99%, which, despite a slight decline from the company’s five-year average, still towers above the sector’s 13.05%.
On the date of publication, Muslim Farooque 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
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.
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