Best small cap stocks to buy in 2022

Small cap stocks offer investors exposure to low valued companies with large growth potential. Our guide below highlights five of the best small cap stocks for 2021. 
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Updated: Sep 23, 2022
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The small-cap stock sector is popular amongst growth-seeking investors with large gains on offer should the timing be right. Read our guide below for five of the best small-cap stocks our experts predict will have a bumper 2021.

What are the top small cap stocks to buy?

Gaining exposure to the small-cap industry can be done by buying the best small-cap stocks. Check out the table below for our experts’ top five picks. 

#Stock tickerCompany nameTrade now
1HEXOHEXO Corp.
2ACBAurora Cannabis Inc.
3GPROGoPro Inc.
4VSTOVista Outdoor Inc.
5DINDine Brands Global, Inc.
List selected by our team of analysts, updated 15th October 2021.

1. HEXO Corp (NASDAQ: HEXO)

HEXO Corp. conducts its business in the fast-growing cannabis sector. The company is an award-winning consumer packaged goods cannabis company serving both the recreational and medical marijuana markets. 

The company’s recent $400 million acquisition of Redecan, a profitable Canadian cannabis grower, saw HEXO take the number one spot in market share for the Canadian recreational marijuana market. 

While the earlier part of 2021 has seen HEXO lose over 30% in its stock price. However, its recent acquisition of Redecan and the increased possibility of federal legalisation of cannabis has resulted in analysts setting a price target of over $4 for HEXO, a substantial uplift from current prices. 

2. Aurora Cannabis (NASDAQ: ACB)

Another cannabis company takes the second spot on our best small-cap list; this time, it is Aurora Cannabis. This Canadian-based business is one of the worlds largest and fastest-growing cannabis companies operating in over 20 countries around the globe. 

Aurora focuses on three sectors, including worldwide sales of medical marijuana and recreational cannabis in Canada, and the company accessed the CBD market in the USA through its acquisition of wellness company, Reliva, in 2020. 

2021 hasn’t been kind to Aurora’s stock price, with the company trading 27% lower than it was in the early part of the year. However, despite slightly missing fourth-quarter sales estimates, the company has revealed a cost-saving strategy which they expect will save between $60 – $80 million going forward. Coupled with medical marijuana revenue growing by 9% to $35million this year, our experts foresee further gains in Aurora’s stock price. 

3. GoPro Inc (NASDAQ: GPRO)

Manufacturing and selling cameras and camera accessories since 2002, GoPro has grown into an international consumer goods company selling more than 26 million cameras in over 100 countries worldwide.

Since becoming a publicly-traded company in 2014 and with a market cap sitting at well over $1 billion, GoPro has seen its product line evolve with over 1,600 global patents granted. A September 2021 release of the Hero10 Black camera generated a much-needed boost in interest as the company continues to fend off competition from ever-improving smartphone cameras. 

The company recently launched a subscription service, including cloud storage and editing tools resulting in a new high-margin revenue model, making the stock an appealing investment in the small-cap space.  

4. Vista Outdoor Inc (NYSE: VSTO)

A leading American designer, producer and seller of outdoor sports and recreation products, VSTO joins our list of the best small-cap stocks to buy. Operating in two markets, shooting and outdoor products, Vista is the parent company to many ammunition makers and suppliers throughout the U.S. 

In recent times, the business announced an agreement to buy California-based golf performance analysis company, Foresight Sport, in a deal worth around $500 million. This could potentially boost earnings while positioning the company as one of the top players in the golf technology market. 

Lockdowns from the COVID-19 pandemic saw more people take up outdoor activities which helped Vista’s stock price rise steadily, and as a result, analysts have set their sights higher.

5. Dine Brands Global (NYSE: DIN)

Food and beverage company Dine Brands Global is based in Glendale, California. It operates two of the United States’ most famous restaurants: Applebys and the International House of Pancakes (IHOP). Between the two, Dine has over 3,500 restaurants in 17 countries around the world. 

Global lockdowns in 2020 obviously had a negative impact on DIN, resulting in the company trading at its lowest level for five years. However, with vaccine rollouts and world economies reopening, Dine has recovered to pre-pandemic levels quickly and its bullish run looks set to continue.

Dine’s revenue stood at over $900 million in 2019 and a whopping $1.6 billion back in 2008, and while COVID-19 continues to impact this figure today, it remains one of the top restaurant brands in North America. If it can return to the glory days of the 2010s, Dine could be on course for impressive growth.

Where to buy the best small cap shares

You can purchase small-cap shares through a stockbroker. With low fees, excellent online platforms and full regulation, the below brokers offer easy access to small-cap stocks. 

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What is a small cap stock?

A small-cap stock is used to describe a company that has a market capitalisation of between $300 million and $2 billion. A company’s market capitalisation is the value of its outstanding shares. We can calculate this figure by multiplying the current share price by the number of outstanding shares. 

Small-cap stocks generally tend to be younger companies, although some well established smaller businesses fall into this category. Unlike their large or mid-cap counterparts, small caps are an attractive choice for growth-seeking investors.

Are small cap shares a good investment?

Investing in small-cap companies can offer investors large returns. Many large-cap companies started off small. Take Tesla, for example; in 2010 it was trading as a small-cap stock with a market cap of just over $1 billion. Today it has grown into a mega-cap, with a market cap of just under $800 billion. The phenomenal growth seen by Tesla and other giant companies is a driving force behind investors seeking the best small-cap stocks.

While small-cap stocks can offer growth, their share prices are often volatile and can dramatically fluctuate. As small-cap stocks are generally younger companies there’s no guarantee that their share prices will rise. Historically, however, small caps outperform large companies long term. 

Small-cap companies are suited to investors seeking growth. Incorporating a portion of an investment portfolio into the best small-cap stocks can offer investors long term gains and diversification during difficult markets. 

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Prash Raval
Financial Writer
When not researching stocks or trading, Prash can be found either on the golf course, walking his dog or teaching his son how to kick a… read more.