Top Small-Cap Stocks for October 2021

Small-cap stocks are public companies that have market capitalizations ranging from $300 million to $2 billion. Since the share prices of these companies can be very volatile, some companies in the small-cap universe, or in small-cap indexes, can have market caps significantly higher than this range at any particular time. Some of the stocks classified as small caps are movie theater chain AMC Entertainment Holdings Inc. (AMC), printing and imaging company Eastman Kodak Co. (KODK), and retail drugstore chain Rite Aid Corp. (RAD).

Small-cap stocks, as represented by the Russell 2000 Index, have outperformed the broader market, providing investors with a total return of 57.2% compared to the Russell 1000’s total return of 40.7% over the past 12 months. These market performance numbers and the statistics in the tables below are as of Sept. 23, 2021.

Here are the top three small-cap stocks with the best value, fastest growth, and most momentum. The market valuations of some of the companies listed below are above the generally agreed upper limit of $2 billion for a stock to be considered small cap. This tends to happen in periods of higher volatility, especially for momentum stocks. However, they are still classified as small cap because stocks are not re-indexed as rapidly as their price movement. Their valuations may drop later as volatility subsides.

Best Value Small-Cap Stocks

These are the small-cap stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you’re paying less for each dollar of profit generated.

Best Value Small-Cap Stocks
  Price ($) Market Cap ($B) 12-Month Trailing P/E Ratio
California Resources Corp. (CRC) 42.05 3.4 0.9
Home Point Capital Inc. (HMPT) 3.90 0.5 1.0
Genworth Financial Inc. (GNW) 3.41 1.7 1.6

Source: YCharts

  • California Resources Corp.: California Resources is an oil and natural gas exploration and production (E&P) company with operations in California. It produces crude oil, natural gas, and natural gas liquids (NGL). It also operates a power plant that generates electricity from natural gas. California Resources announced in early August financial results for Q2 of its 2021 fiscal year (FY), the three-month period ended June 30, 2021. The company’s net loss attributable to common shareholders narrowed to $111 million from $271 million in the year-ago quarter. Revenue rose 10.1% year over year (YOY).
  • Home Point Capital Inc.: Home Point Capital is a holding company that, through its subsidiaries, operates as a residential mortgage originator and servicer. It primarily operates through the wholesale channel, working with independent mortgage brokers to reach end-borrower customers.
  • Genworth Financial Inc.: Genworth Financial is an insurance holding company. It is primarily focused on offering mortgage insurance and long-term care insurance for both individuals and groups. The company recently announced that it has completed the initial public offering (IPO) of its subsidiary Enact Holdings Inc. (ACT), a mortgage insurance provider. Approximately 15.3 million shares of Enact common stock were sold in the IPO at a price of $19.00 per share.

Fastest Growing Small-Cap Stocks

These are the top small-cap stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and their most recent quarterly YOY earnings per share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.

Fastest Growing Small-Cap Stocks
  Price ($) Market Cap ($B) EPS Growth (%) Revenue Growth (%)
The Joint Corp. (JYNT) 102.26 1.5 1,700 60.6
Echo Global Logistics Inc. (ECHO) 47.72 1.3 1,620 81.6
Encore Wire Corp. (WIRE) 91.01 1.9 1,370 193.5

Source: YCharts

  • The Joint Corp.: The Joint owns and operates chiropractic clinics throughout the U.S. It offers a variety of membership and wellness packages.
  • Echo Global Logistics Inc.: Echo Global Logistics provides technology-enabled transportation and supply chain management services. Its primary focus is on arranging transportation with truckload and less than truckload carriers. The company recently agreed to be acquired for approximately $1.3 billion by funds managed by The Jordan Company L.P. The transaction, which is expected to be completed before the end of 2021, will result in Echo Global Logistics becoming a private company.
  • Encore Wire Corp.: Encore Wire manufactures electrical building wire and cable. Its products are used for interior wiring in homes, apartments, and other residential buildings. It also makes wire for use in commercial and industrial buildings.

Small-Cap Stocks with the Most Momentum

These are the small-cap stocks that had the highest total return over the last 12 months.

Small-Cap Stocks with the Most Momentum
  Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
Ocugen Inc. (OCGN) 7.50 1.5 2,150
Marathon Digital Holdings Inc. (MARA) 35.70 3.6 1,860
Agiliti Inc. (AGTI) 20.02 2.6 1,230
Russell 1000  N/A N/A 40.7
Russell 2000 N/A N/A 57.2

Source: YCharts

  • Ocugen Inc.: Ocugen is a clinical-stage biopharmaceutical company. It’s focused on the discovery, development, and commercialization of gene therapies to cure diseases related to blindness. It’s also developing a COVID-19 vaccine.
  • Marathon Digital Holdings Inc.: Marathon Digital Holdings is a digital asset technology company engaged in the mining of cryptocurrencies. Its primary focus is on the blockchain and the generation of digital assets.
  • Agiliti Inc.: Agiliti is a medical equipment management and services company. It provides clinical engineering, imaging solutions, surgical activities, and medical equipment rental solutions. The company recently announced that it agreed to acquire Sizewise Rentals LLC, a manufacturer and distributor of specialty hospital beds, surfaces, and patient handling equipment, for $230 million. The transaction is expected to be completed early in Q4 2021.

The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

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