5 Best Small Cap Stocks to Buy for Q3 2024
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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 2024.
What are the top small cap stocks to buy?
Copy link to sectionGaining 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 ticker | Company name | Learn more |
|---|---|---|---|
| 1 | HIMS | Hims & Hers | Learn more > |
| 2 | INTA | Intapp Inc. | Learn more > |
| 3 | ROOT | Root Inc. | Learn more > |
| 4 | VSTO | Vista Outdoor Inc. | Learn more > |
| 5 | PWP | Perella Weinberg Partners | Learn more > |
1. Hims & Hers (NASDAQ: HIMS)
Copy link to section- Market Cap: $4.58 Billion
- Industry: Health/Tech
- 1-Year Return: 136%
- 5-Year Return: 115%
- Average Stock Target: $21.27
Hims & Hers is one of the fastest growing in the healthcare industry. It operates an online platform where people buy products in areas like sexual health, weight loss, hair loss, and mental health. Most recently, the company started selling weight loss drugs.
Hims & Hers has seen its revenue jump in the past few years. It has soared from $82.6 million in 2019 to over $872 million in 2023. The management expects that this growth will continue in the coming years as its brand becomes more popular in the US. It also expects to expand its business internationally.
Analysts have also bought the growth story. They expect that its annual revenue will jump to over $1.2 billion in 2024 and $1.52 billion in 2025. Some of the most bullish analysts are from Canaccord Genuity, Deutsche Bank, and Piper Sandler.
2. Intapp Inc. (NASDAQ: INTA)
Copy link to section- Market cap: $2.55 Billion
- Industry: SAAS
- 1-Year Return: -16.5%
- 5-Year Return: 30%
Intapp is a software provider that works in the professional services sector, including private capital, investment banking, legal services, and consulting firms. The company generates revenue through software subscriptions and professional services. Intapp makes use of AI and cloud technology to help service firms better compete with larger companies.
Intapp went public in 2021 and has seen continued growth, with annual recurring revenues up over 20% in the last five years. The company is positioned to benefit as professional services firms aim to digitally transform. With a market cap under $3 billion, Intapp is still considered a small-cap stock. As a newer public company investing heavily in growth, Intapp is not yet profitable. However, with a 95% client retention rate and partnerships with firms like KPMG, Intapp has lots of potential.
Many analysts view Intapp stock as undervalued, given the large addressable market and competitive field in professional services technology. For investors looking to target high-growth small companies, Intapp could be an inviting addition with strong prospects to deliver shareholder returns over the long term.
3. Root Inc. (NASDAQ: ROOT)
Copy link to section- Market Cap: $760 Million
- Industry: Insurance/Tech
- 1-Year Return: 926%
- 5-Year Return: N/A
- Average Stock Target: $68
The insurance industry is a big one with a total addressable market of over $9 trillion globally. In the US, total premiums totalled over $1.5 trillion in 2021. Root is one of the fastest-growing companies in the auto insurance industry.
The company uses technology to deliver its insurance solutions. Over the years, its revenue has grown exponentially as more people have embraced its solutions. Its revenue jumped from $275 million in 2019 to over $399 million in 2023. Analysts expect that its revenue will surge to $1 billion this year and $1.3 billion in 2025.
It has also narrowed its losses and the management expects that it will breakeven either in 2024 or 2025. The company has more room to grow since very few Americans are using online platforms to buy insurance.
However, the biggest risk is that it is competing with some of the biggest companies in the world like Geico, which is owned by Berkshire Hathaway, Progressive, and Travellers.
4. Vista Outdoor Inc (NYSE: VSTO)
Copy link to section- Market Cap: $2 Billion
- Industry: Advertising
- 1-Year Return: 30%
- 5-Year Return: 361%
- Average Stock Return: $38.3
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.
Vista Outdoor’s revenue has been a bit volatile in the past few years. It generated over $2.7 billion in the past financial year, a drop from $3 billion a year earlier. Still, analysts are optimistic that its business will continue to thrive, with its revenue set to hit $2.73 billion and $2.9 billion in 2024 and 2025, respectively.
5. Perella Weinberg Partners (NASDAQ: PWP)
Copy link to section- Market Cap: $1.41 billion
- Industry: Finance
- 1-Year Return: 88%
- 5-Year Return: 64%
- Average Stock Target: $17.8
Perella Weinberg Partners is another good small cap company to invest in. It is a boutique firm that provides strategic advisory services across all sectors. Most of its business is in the merger and acquisition (M&A) and debt capital raising.
Over the years, it has worked on some of the biggest deals in the US. For example, it was the lead advisor in AT&T’s WarnerMedia merger with Discovery in a $22.2 billion deal. It was also the lead advisor in the acquisition of Hillrom by Baxter.
Perella Weinberg’s revenue dropped to $631 million in 2022 as the volume of deal-making dropped in Wall Street, Recently, however, it has recorded strong revenue growth. It made $648 million in 2023 and the company is well-positioned to generate solid returns when interest rates start falling.
Where to buy the best small cap shares
Copy link to sectionYou 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?
Copy link to sectionA 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?
Copy link to sectionInvesting 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.
Methodology: How we choose the best small cap stocks
Copy link to sectionAt Invezz, our mission is to empower our readers with the most accurate and reliable financial information. Our curated selection of the best stocks in specific industries is designed to provide investors with well-researched, expertly reviewed stock recommendations. Our team follows a rigorous process to ensure our readers receive high-quality, trustworthy stock selections.
- Initial screening. Our team of experienced stock market analysts conducts an initial screening of stocks within the chosen industry. This involves analyzing a broad range of companies based on key financial metrics such as revenue growth, profitability, debt levels, and market capitalization.
- Earnings reports and financial analysis. Analysts review the latest earnings reports of shortlisted companies. This includes a detailed assessment of financial statements, looking for consistent earnings growth, strong balance sheets, and positive cash flow trends. Special attention is given to year-over-year performance and quarterly results.
- Sector analysis. A comprehensive sector analysis is conducted to understand the macroeconomic factors affecting the industry. This includes examining market trends, competitive landscape, regulatory changes, and technological advancements. Our analysts utilize industry reports, market research, and economic forecasts to gain a holistic view of the sector.
- Analyst recommendations. We consider recommendations from reputable sources such as Barron’s and Zacks. These sources provide expert opinions and ratings on stocks, which serve as an additional layer of validation for our selections. Incorporating external analyst recommendations ensures that our curated stocks are backed by a consensus of expert views.
- Internal review. After the initial selection by our analysts, the chosen stocks are reviewed by a sub-editor. The sub-editor ensures that the analysis is clear, concise, and adheres to Invezz’s editorial guidelines. This review process helps maintain the quality and readability of our content, making it accessible to a broad audience.
- Quarterly updates. To ensure our stock recommendations remain relevant and up-to-date, we update the curated section quarterly. Each update cycle involves re-evaluating the stocks based on the latest financial reports, industry developments, and market conditions. This regular update process ensures that our recommendations reflect the most current information available.
Our approach combines expert analysis, comprehensive research, and regular updates to deliver reliable and insightful investment recommendations. Read more about our review process and editorial policy.
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