In good markets and improving markets, investors are curious about the top small-cap stocks. Why? Simply put, for opportunity. Small-cap stocks can deliver outsized returns in the right environment.
Specifically, I wanted to take a closer look at stocks that have a low market capitalization of less than $3 billion and generate a positive bottom-line result. It helped if these names had been trading well on the year, giving an additional catalyst for the selection.
That obviously cuts down a lot of candidates, but it’s a fun exercise to get away from the constant bombardment of mega-cap tech and AI stocks.
With that in mind, let’s look off the beaten path a bit and explore some profitable small-cap growth stocks.
Shake Shack (SHAK)
Shake Shack (NYSE:SHAK) made a lot of noise when it came public, given its association with New York City and given Daniel Meyer’s success in the restaurant business. Shake Shack has since grown to sport many locations all throughout the country and the world.
The company generated a loss per share last year, but is forecast to return to profitability this year. Operating margin is on the mend as well.
When the firm reported earnings in early May, Shake Shack delivered a top-line and bottom-line earnings beat as sales grew 24.5% year-over-year. Forecasts call for more than 20% revenue growth this year, then almost 17% growth in 2024. Further, estimates call for earnings to nearly double in 2024.
All that aside, the company has clear demand for its product. Shake Shack has built an excellent brand and that’s clearly fueling its growth.
Canadian Solar (CSIQ)
For some investors, solar stocks are off the table. For others though, they should keep an eye on Canadian Solar (NASDAQ:CSIQ). This stock has been performing quite well lately. Shares have rallied in six straight trading sessions and are up more than 20% in that stretch.
The momentum has been ongoing this year, as well. Shares of CSIQ stock are up about 40% so far in 2023 and up roughly 45% over the last 12 months.
Part of the reason shares have been trading so well lately? It helps that solar stocks, like First Solar (NASDAQ:FSLR), have been trading better. But a big catalyst has been earnings and expectations for future growth.
The firm recently delivered a hefty earnings beat, with earnings of $1.19 a share coming in more than double analysts’ expectations. While revenue was more or less in-line with expectations, revenue guidance and management’s overall outlook was strong.
Consensus estimates now call for 25% revenue growth this year and 17% growth in 2024. That’s alongside more than 60% earnings growth in 2023, which leaves CSIQ stock at a reasonably low valuation.
Crane NXT (CXT)
Crane NXT (NYSE:CXT) weighs in at the heavy end of what many would consider a small-cap stock. In fact, with a market cap near $3 billion, most wouldn’t consider it a small-cap. That said, I felt this one is worth a mention.
Founded in 1855, the firm has quietly been around for quite some time. They operate in several sectors including aerospace and electronics, process flow technologies and engineered materials.
The company’s stock has been explosive and recently underwent a pretty big change. The company divided its stock into Crane NXT and Crane Co. (NYSE:CR), a move designed to create value.
The Crane NXT portion of the business “focuses on payment and merchandising technologies. It intends to offer electronic equipment and associated software leveraging extensive, and proprietary core capabilities.”
— Brett Kenwell
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Source: Investor Place