If you want big returns, you gotta think small – as in small-cap stocks. That’s not to say the large-capitalization enterprises can’t get you to investment Valhalla. However, the most diminutive companies have math on their side.
Basically, I’m referring to the law of small numbers. When you’re dealing with small-cap stocks, you’re almost always targeting businesses that don’t generate much attention. So, when a less-appreciated firm presents impressive financial performance metrics, they can send shares skyrocketing.
Of course, the opposite is true – less-than-encouraging news can quickly sink your holdings. You want to keep this risk-reward profile in mind. Still, if you’re able to handle the heat, these small-cap stocks could pack a serious punch.
ACM Research (ACMR)
A leading supplier of wafer processing equipment, ACM Research (NASDAQ:ACMR) specializes in both front and back-end semiconductor services. Specifically, the company focuses on developing and manufacturing wet cleaning equipment along with tools for advanced wafer-level packaging processes. ACM has garnered a reputation for meeting the demanding requirements of chip manufacturers for precision cleaning and surface preparation.
Fundamentally, the fabrication process of computer chips can be incredibly complex. As a result, even with strict cleanroom protocols, semiconductors can be impacted by airborne contaminants and chemical residues, among other concerns. Therefore, ACM benefits from what should be a predictable demand profile.
In fact, data from Yahoo Finance shows that by the end of this year, experts project sales to reach $701.7 million. If so, that would imply an almost 26% gain from last year’s tally of $557.72 million. In 2025, revenue may rise to $866.91 million, implying 23.5% up from 2024’s projected top line.
Lastly, analysts rate ACMR a unanimous strong buy with a $38.20 average price target. It’s one of t he small-cap stocks to consider.
Catalyst Pharmaceuticals (CPRX)
Based in Coral Gables, Florida, Catalyst Pharmaceuticals (NASDAQ:CPRX) is a biopharmaceutical company focused on the development and commercialization of therapies for rare neurological diseases. Catalyst is known for Firdapse, which is a treatment for Lambert-Eaton myasthenic syndrome (LEMS). This is a rare autoimmune disorder characterized by muscle weakness and fatigue.
In addition, the company has developed Vamorolone, which addresses Duchenne muscular dystrophy. Per Catalyst’s website, the U.S. Food and Drug Administration (FDA) has approved both therapeutics. Having transitioned to a commercialization phase, experts anticipate great things for the pharma. By the end of this fiscal year, they anticipate sales to reach $460.37 million, up 15.6% from last year’s tally.
Also, by 2025, revenue should hit $568.39 million, per Yahoo Finance data. If so, that would imply 23.5% gains from 2024’s projected top line. And these are average estimates. In terms of the most optimistic targets, 2024 and 2025 sales could hit $465.6 million and $663.07 million, respectively.
To close, analysts peg shares as a unanimous strong buy with a $25.09 price target. That implies almost 51% upside potential, making CPRX one of the small-cap stocks to consider.
AlphaTec (ATEC)
A medical technology firm, AlphaTec (NASDAQ:ATEC) focuses on the design, development, and marketing of products for the surgical treatment of spine disorders. Known on its website as ATEC (though it’s called AlphaTec in its Form 10-K disclosure), the MedTech specialist offers a comprehensive portfolio of spinal fusion solutions. These include implants, instruments, and biologics aimed at addressing various spinal pathologies.
Notably, Wall Street experts have high hopes for AlphaTec. By the end of this fiscal year, they anticipate revenue to reach $595.6 million. If so, that would be a 23.5% lift from last year’s tally of $482.26 million, per Yahoo Finance. In 2025, sales may reach $709.74 million. That would be a 19.2% gain from 2024’s projected revenue.
Regarding the most optimistic sales target, sales may ping at $597.4 million and $742.6 million, respectively, in 2024 and 2025. However, ATEC is a risky venture, with shares down more than 13% since the beginning of this year.
Despite the ugly print, analysts rate ATEC a unanimous strong buy with a $22.81 average price target. If you’ve got speculation money lying around, this may be one of the small-cap stocks to buy.
On the date of publication, Josh Enomoto 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.
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