Let’s discuss a bit about progress and potential. The 2 are usually not all the time the identical factor, however they each are important for profitable investing. The intention of all inventory investments, in any case, is to realize progress – and meaning discovering shares with the very best potential.
It’s pure to gravitate towards the headline-grabbing, big-name giants; they’ve acquired enormous market valuations, and have made their early traders very blissful. However there’s an unlucky truism within the markets, based mostly on the iron guidelines of arithmetic, that the bigger an organization will get, the much less possible it’s to point out large returns. It’s much more possible for a $200 million firm to double in worth than for a $200 billion large.
And this brings us to the small-cap shares. For traders searching for one of the best mixture of excessive potential for progress and low price of entry, the small caps could also be simply the ticket.
We’ve used the TipRanks database to search out a number of that match a profile: a market cap below $400 million and a share value under $10. Even higher, these small-cap tickers have Sturdy Purchase consensus scores from the analyst group, and boast robust upside potential.
PowerFleet, Inc. (PWFL)
The Web of Issues is remodeling a bunch of industries, from manufacturing unit flooring to warehouses to trucking fleets. PowerFleet, the primary small-cap inventory we’re , applies IoT and M2M tech to the safety, management, monitoring, and administration of high-end property, together with tractor-trailers, containers, industrial vans, and cargo, automobile, and truck fleets.
PowerFleet’s 1Q income was in keeping with the earlier quarter, and included an enchancment in earnings. On the high line, the reported income of $29 million was just one.3% off of This autumn’s consequence. The 9-cent EPS loss reported was a 25% enchancment from the 12-cent loss reported within the earlier quarter. 12 months-over-year, EPS improved by 40%.
Earlier this month, PowerFleet scored two main new contracts. On Might 10, the corporate introduced a 4-year contract with the Israel Police for implantation of a fleet administration and driver answer system for greater than 7,500 autos of 61 differing kinds. The contract contains an choice for a 4-year renewal. Two days later, PowerFleet introduced a smaller cope with Alabama-based White Oak Transportation, to provide monitoring providers for the trucking firm’s fleet of 850 autos, particularly its cargo trailers.
Masking PowerFleet for Canaccord, 5-star analyst Michael Walkley sees a transparent path forward for the corporate’s continued progress.
“With 600K+ subscribers, PowerFleet has the dimensions and worldwide footprint to compete for world tenders in opposition to main fleet and asset monitoring opponents. For fleet administration, PowerFleet is among the solely true end-to-end options available in the market spanning in-cab, refrigerated trailers, dry vans, and containers,” Walkley opined.
The analyst added, “We imagine PowerFleet has a powerful product portfolio and a number one options platform to develop its market share. This energy is demonstrated by its expansive world buyer base… We imagine PowerFleet has the management workforce in place to execute on its progress technique and anticipate recovering gross sales and increasing margins as world economies recuperate.”
To this finish, Walkley charges PWFL a Purchase, and his $12 value goal implies a one-year upside of 84%. (To observe Walkley’s observe document, click on right here)
Total, the unanimous Sturdy Purchase consensus score right here, based mostly on 4 current optimistic opinions, reveals that Wall Avenue agrees with Walkley on this inventory. The shares are buying and selling for $6.51, and the typical value goal of $11.13 signifies a possible upside of 71% for the following 12 months. (See PWFL inventory evaluation on TipRanks)
AXT, Inc. (AXTI)
AXT is a cloth science firm that inhabits the availability chain for the semiconductor trade. AXT develops and manufactures the high-performance rare-metal substrate wafers needed within the building of semiconductor chips and optoelectronic units. AXT has operations in each California and China, staying near Silicon Valley prospects and Chinese language uncooked supplies.
The corporate holds an important area of interest within the chip trade, and its income and earnings have been reflecting that. Within the first quarter of 2021, income hit $31.4 million, passing the $30 million mark for the primary time on 51% year-over-year progress. EPS hit 8 cents, a dramatic turnaround from the 1-cent loss reported within the year-ago quarter.
Together with the Q1 outcomes, AXT additionally introduced its first deliveries of 8-inch diameter gallium arsenide (GaAs) substrates to a serious buyer. AXT has acquired ‘important curiosity’ from potential prospects of GaAs merchandise, and predicts rising demand because the merchandise finds extra purposes.
Analyst Richard Shannon, masking this inventory for Craig-Hallum, takes especial be aware of the rising demand for the corporate’s merchandise.
“The demand profile from InP (optics, well being monitoring) and GaAs (5G, optics, 3DS, microLED) are as highly effective as any we are able to discover throughout small-cap tech. With an enhancing buyer set (tier 1’s driving a lot of future progress), GM that may nonetheless develop and valuation enchancment potential from a STAR trade itemizing in mid-2022, traders have a number of methods to win on this inventory,” Shannon wrote.
Shannon’s bullish feedback again up his Purchase score, and his $17 value goal suggests a 90% progress potential within the yr forward. (To observe Shannon’s observe document, click on right here)
The Wall Avenue opinions on AXTI break down 3 to 1 in favor of Buys versus Holds, giving the inventory its Sturdy Purchase consensus score. Shares in AXTI are promoting for $8.95 every, and the typical goal of $16 signifies a potential upside of ~79% from that stage. (See AXTI inventory evaluation on TipRanks)
CECO Environmental (CECE)
For the final inventory on our listing, we’ll shift to the inexperienced economic system, the place CECO Environmental develops, gives, and set up air high quality and fluid dealing with methods. Briefly, the corporate offers in air air pollution management expertise, a distinct segment that has been in demand for the reason that Seventies. CECO gives know-how and methods in a variety of industries, together with building supplies like bricks, cement, metal, and glass; and manufacturing, within the automotive, aerospace, pharmaceutical, chemical, and gas refining sectors.
Within the firm’s most up-to-date monetary launch, for 1Q21, the highest line got here in at $71.9 million, slightly below the $80.5 million reported within the year-ago quarter, whereas EPS fell from 10 cents per share one yr in the past to three cents within the present report. In additional optimistic notes, the corporate reported a year-over-year enhance in bookings, from $75.7 million to $92.1 million, and the work backlog of $203.1 million was up 11% from one yr in the past.
A number of days after the earnings launch, CECO introduced that it had gained a large-scale contract with a serious semiconductor chip producer. The chip trade repeatedly works with quite a lot of uncommon metals and different pollutant chemical compounds – and CECO’s new contract covers scrubber and exhaust methods, in addition to recirculation pumps — objects needed for the chip maker to satisfy or exceed environmental laws.
Turning to the analyst group, H.C. Wainwright analyst Amit Dayal believes the corporate has so much going for it and a shiny future.
“The corporate seems to be in restoration from COVID-19 headwinds, with bookings rising to $92.1M through the quarter… The final time bookings have been at or above these ranges was throughout mid-2019…. Throughout the subsequent few quarters, we count on to see improved revenues from Engineered Programs because the broader power markets enhance. Administration highlighted that the corporate’s bid proposal surroundings has been enhancing, with order pipeline of over $2.0B, which we imagine ought to help persevering with order enchancment over the following few quarters,” the 5-star analyst defined.
Primarily based on the above, Dayal charges CECE shares a Purchase score, and his $15 value goal signifies confidence in a 100% upside for the yr forward. (To observe Dayal’s observe document, click on right here)
As soon as once more, we’re a inventory with a unanimous Sturdy Purchase consensus score – this one based mostly on 3 optimistic Wall Avenue opinions. The shares are promoting for $7.50 and have a $12 common value goal, suggesting a 12-month upside of 60%. (See CECE inventory evaluation on TipRanks)
To seek out good concepts for small-cap shares buying and selling at enticing valuations, go to TipRanks’ Greatest Shares to Purchase, a newly launched device that unites all of TipRanks’ fairness insights.
Disclaimer: The opinions expressed on this article are solely these of the featured analysts. The content material is meant for use for informational functions solely. It is rather vital to do your individual evaluation earlier than making any funding.