Discover 10 Small Cap Stocks to Buy Before They Explode

In the dynamic world of investing, discovering small cap stocks to buy before they explode in value represents a golden opportunity for both seasoned and novice investors alike. Often referred to as the “hidden gems” of the market, these small cap stocks to buy today offer significant growth potential that, when identified early, can lead to substantial returns. With the market constantly evolving, keeping an eye on the best small cap stocks to buy now becomes not just an investment strategy but a quest for the next big success story.

This article presents a curated small cap stocks list, focusing on top small capitalization companies ranging from innovative technology firms to niche market leaders, poised for outstanding growth. As we delve into the details of each, from GeneDx (WGS) with its cutting-edge genetic testing capabilities to DoubleDown Interactive (DDI) leading in the digital gaming sector, and beyond, we provide insights into why these stocks are primed “to explode” in the near future. By the end of this guide, investors will be equipped with the knowledge to identify the best small cap stocks to buy and understand the unique factors that set these small stocks to invest in apart from their larger counterparts, potentially leading to lucrative opportunities.

GeneDx (WGS)

GeneDx Holdings Corp. (WGS) has been upgraded to a Zacks Rank #1 (Strong Buy), reflecting an upward trend in earnings estimates and the potential for the stock price to move higher in the near term ¹. The Zacks rating system relies on changing earnings picture, tracking EPS estimates for the current and following years from sell-side analysts ¹.

For the fiscal year ending December 2024, GeneDx is expected to earn -$0.92 per share, a change of 82.3% from the year-ago reported number ¹. Analysts have been steadily raising their estimates for GeneDx over the past three months, with the Zacks Consensus Estimate increasing by 54.5% ¹.

The GeneDx stock price fell by -4.15% on July 12, 2024, from $34.22 to $32.80 ². Despite this recent dip, the stock is up by 23.12% over the past 2 weeks and is expected to rise 147.51% during the next 3 months, with a 90% probability of holding a price between $69.84 and $85.53 at the end of this period ².

GeneDx finds support from accumulated volume at $31.29, which may present a buying opportunity ². The stock has had daily average volatility of 8.22% over the last week and is considered “high risk” due to its large prediction interval from the Bollinger Band ².

Several short-term signals, along with a general good trend, indicate that the current level may hold a buying opportunity for GeneDx stock to perform well in the short-term ². The analysis conclusion for this stock has been upgraded from a Hold/Accumulate to a Buy candidate ².

DoubleDown Interactive (DDI)

DoubleDown Interactive Co. (DDI) is a leading developer and publisher of digital games on mobile and web-based platforms. The company’s future growth prospects appear promising, with earnings and revenue forecast to grow by 0.2% and 4.3% per annum respectively over the next few years ³. EPS is also expected to grow by 0.4% per annum, while return on equity is projected to reach 11.1% in 3 years ³.

Despite the positive growth outlook, DoubleDown Interactive’s stock has been given a ‘Cautious Hold’ recommendation by Macroaxis over a 90-day investment horizon, considering an above-average risk tolerance ⁴. The stock price fell by 4.15% on July 12, 2024, from $34.22 to $32.80, although it is up by 23.12% over the past 2 weeks ². The stock is expected to rise 147.51% during the next 3 months, with a 90% probability of holding a price between $69.84 and $85.53 at the end of this period ².

DoubleDown Interactive Growth Potential

Several factors contribute to DoubleDown Interactive’s growth potential:

1. The company operates in the rapidly growing digital gaming industry, particularly in the mobile and social casino gaming segments.
2. DoubleDown Interactive has a diversified portfolio of popular game titles, including DoubleDown Casino, which has a loyal player base.
3. The company has been expanding its geographic presence, particularly in the Asia-Pacific region, which presents significant growth opportunities.

DoubleDown Interactive Financials

The company’s financial performance has been mixed in recent years. While it generated strong revenue and profits in 2021, it reported a significant net loss of $234 million in 2022 ⁴. However, net income recovered to $101.7 million in 2023 and is projected to reach $106.7 million in 2024 ⁴.

In conclusion, DoubleDown Interactive presents an intriguing investment opportunity for those willing to tolerate above-average risk. The company’s strong position in the digital gaming industry and potential for international expansion offer promising growth prospects. However, investors should carefully monitor the company’s financial performance and any potential legal or regulatory risks before making an investment decision.

Immersion (IMMR)

Immersion Corporation (IMMR) is a leading developer and licensor of touch feedback technology, also known as haptics, for digital devices and experiences. The company’s technology allows users to engage with digital content through the sense of touch, providing a more immersive and realistic experience ⁵.

Immersion Growth Potential

Immersion has significant growth potential in several key areas:

1. Expansion into new markets: Immersion’s haptic technology has applications in various industries, including gaming, automotive, virtual reality, and wearables. As these markets continue to grow, Immersion has the opportunity to expand its presence and capture a larger share of the market ⁵.
2. Partnerships with major tech companies: Immersion has established partnerships with leading technology companies, such as Sony and Samsung, to integrate its haptic technology into their products. These partnerships provide Immersion with access to a large customer base and help drive adoption of its technology ⁵.
3. Strong patent portfolio: Immersion holds over 1,400 patents and patent applications worldwide, providing a strong competitive advantage and potential for licensing revenue growth ⁵.

Immersion Financials

Immersion’s financial performance has been strong in recent years, with revenue growing from $35.09 million in 2021 to a projected $70.52 million in 2024, representing a 107.91% increase ⁶. The company’s earnings per share (EPS) have also shown significant growth, increasing from $0.39 in 2021 to a projected $1.15 in 2024 ⁶.

Analysts have a “Strong Buy” consensus rating for Immersion stock, with a 12-month price target of $11, representing a 2.61% upside from the current price ⁶. The company’s strong financial performance, growth potential, and analyst confidence make it an attractive investment opportunity in the small cap stocks to buy now category.

Acacia Research (ACTG)

Acacia Research Corporation (ACTG) is a publicly traded company that invests in intellectual property and engages in the licensing and enforcement of patented technologies ⁷. The company operates through three segments: Intellectual Property Operations, Industrial Operations, and Energy Operations ⁷.

Acacia Research Company Overview

Acacia Research owns or controls the rights to various patent portfolios covering technologies used in a range of industries ⁷. The company also manufactures and distributes printers and consumable products for industrial printing applications, offering supply-chain printing solutions for manufacturing, transportation, logistics, retail, food and beverage, and pharmaceutical distribution industries ⁷.

As of December 31, 2022, Acacia Research had 170 full-time employees ⁷. The company is headquartered in New York, New York, and its fiscal year ends on December 31 ⁷.

Acacia Research Growth Potential

Acacia Research’s growth potential lies in its ability to acquire and monetize intellectual property assets, as well as expand its presence in the industrial printing and energy sectors. The company’s diverse patent portfolio and licensing expertise position it well to capitalize on the increasing importance of intellectual property in today’s technology-driven economy.

Additionally, Acacia Research’s focus on supply-chain printing solutions for various industries presents opportunities for growth as businesses seek to optimize their operations and improve efficiency.

Acacia Research Financials

Acacia Research’s strong net margin of 40.89% and return on equity of 13.02% demonstrate the company’s profitability and efficiency in generating returns for shareholders ⁸. With a low debt-to-equity ratio of 0.02, Acacia Research maintains a healthy financial position, providing flexibility for future growth and investments ⁸.

CTO Realty Growth (CTO)

CTO Realty Growth, Inc. (NYSE: CTO) is a publicly traded real estate investment trust that owns and operates a portfolio of high-quality, retail-based properties located primarily in higher growth markets in the United States ⁹. The company has undergone a significant transformation in recent years, including a name change, conversion to a REIT, and a strong focus on active portfolio management ⁹.

CTO Realty Growth Company Overview

CTO Realty Growth has been in operation for more than 110 years, starting as a land-focused company and evolving into a dividend-oriented company with income-oriented properties ⁹. The company’s strategy involves acquiring properties in business-friendly states with faster-growing markets, particularly in the Southeast and Southwest regions of the United States ⁹.

The company’s leadership team, including President and CEO John Albright, Senior Vice President and CFO Matthew Partridge, and Senior Vice President and CIO Steven Greathouse, has been instrumental in shaping CTO’s strategy and execution ⁹.

CTO Realty Growth Potential

CTO Realty Growth’s growth potential lies in its ability to acquire well-located assets in attractive geographic areas and enhance its portfolio over time ⁹. The company’s focus on second and third ring suburbs outside of city centers, where population growth has been strong, positions it well for future growth ⁹.

The company’s recent acquisitions, such as the $61.2 million purchase of Plaza at Rockwall in Dallas and the $96 million acquisition of the Collection at Forsyth in Atlanta, demonstrate its commitment to expanding its presence in high-growth markets ⁹.

CTO Realty Growth Financials

While specific financial metrics were not provided in the given information, CTO Realty Growth’s attractive attributes for investors include ⁹:

1. High dividend yield
2. Ability to buy at attractive valuations
3. Strong implied cap rate
4. Purchasing properties below replacement costs

Analysts have noted that CTO’s differentiated strategy, focused on markets with outsized job growth and improving demographics, should drive higher rents and asset values over time ⁹. The company’s efficient asset recycling, selling lower growth and non-core assets to fund acquisitions with leasing upside and redevelopment opportunities, has been a key driver of its success ⁹.

Karat Packaging (KRT)

Karat Packaging Inc., together with its subsidiaries, engages in the manufacture and distribution of single-use disposable products in plastic, paper, biopolymer-based, and other compostable forms used in various restaurant and foodservice settings. The company provides food and take-out containers, bags, tableware, cups, lids, cutlery, straws, specialty beverage ingredients, equipment, gloves, and other products under the Karat Earth brand ¹⁰. It also offers new product development, design, printing, and logistics services ¹⁰.

Karat Packaging operates with 778 full-time employees and is based in Chino, California ¹⁰. The company was founded in 2000, and its fiscal year ends on December 31 ¹⁰.

Karat Packaging Growth Potential

Several factors contribute to Karat Packaging’s growth potential:

1. The company operates in the rapidly growing foodservice packaging industry, driven by increasing demand for takeout and delivery services.
2. Karat Packaging’s focus on eco-friendly and compostable packaging solutions positions it well to capitalize on the growing sustainability trend in the foodservice industry.
3. The company’s diverse product portfolio and ability to offer customized solutions to its clients provide a competitive advantage and opportunities for expansion.

Karat Packaging Financials

Karat Packaging’s financial performance has been strong, with projected revenue growth of 9.41% in 2024 and 6.73% in 2025 ¹¹. The company’s earnings per share (EPS) are also expected to grow by 23.62% in 2024 and 8.77% in 2025 ¹¹.

Analysts have a “Strong Buy” consensus rating for KRT stock, with an average price target of $30.33, representing a 4.59% upside from the current price ¹¹. The company’s solid financial outlook and analyst confidence make it an attractive small cap stock to buy for potential explosive growth.

Urban-Gro (UGRO)

Urban-gro, Inc. (Nasdaq: UGRO) is an integrated professional services and design-build firm offering solutions to the Controlled Environment Agriculture (CEA) and other commercial sectors ¹⁰. The company provides value-added architectural, engineering, and construction management solutions to optimize facility design and performance.

Urban-Gro Company Overview

Urban-gro operates out of offices in five states in the United States, including Colorado, Texas, Georgia, Massachusetts, and Florida, as well as an office in the Netherlands for its European operations ⁹. The company was founded in 2000 and has 778 full-time employees as of December 31, 2022 ¹⁰.

Urban-gro’s leadership team, including President and CEO Bradley Nattrass, Senior Vice President and CFO Matthew Partridge, and Senior Vice President and CIO Steven Greathouse, has been instrumental in shaping the company’s strategy and execution ⁹.

Urban-Gro Growth Potential

Urban-gro’s growth potential lies in several key areas:

1. Expansion into new markets, such as healthcare, industrial, and other commercial sectors, in addition to its strong presence in the CEA market ¹⁰.
2. Offering a diverse range of services, including architectural, engineering, construction management, and consulting, to support clients throughout the entire project lifecycle ¹².
3. Geographic expansion, with a growing presence in the United States and Europe ⁹.

Urban-Gro Financials

Urban-gro reported revenue of $67.0 million in 2022, a 7.9% increase from the prior year ¹³. The company’s net loss was $15.3 million, and adjusted EBITDA was negative $3.9 million in 2022 ¹³.

For the 2023 full year, urban-gro anticipates consolidated revenue in the range of $100 million to $120 million and adjusted EBITDA in the range of negative $3 million to slightly positive ¹³.

Analysts have a “Strong Buy” consensus rating for UGRO stock, with an average price target of $7.05, representing a potential upside from the current price ¹⁴. However, recent analyst actions have included a downgrade from Craig-Hallum, lowering the price target from $6.00 to $3.25 ¹⁴.

Urban-gro’s unique value-added model, sector diversification, and potential for geographic expansion position the company for future growth. However, investors should monitor the company’s financial performance and any potential risks before making an investment decision.

FullNet Communications (FULO)

FullNet Communications (FULO) provides integrated communications services in the United States, including mass notification services, carrier-neutral equipment colocation services, Internet access, web hosting, customized live help desk outsourcing services, and voice and data solutions ¹⁵. The stock is currently off 78% from its peak, but there is strong conviction in FULO at current levels ¹⁵.

FullNet Communications Company Overview

Despite its tiny $5 million market cap, FULO is a very strong company fundamentally ¹⁵. Not only is it profitable with a 16.5% free cash flow margin (better than 81% of telecom peers), but FULO also pays a dividend that yields 5.7% ¹⁵. It trades at just 11 times earnings, and the company has 22 times more cash than debt on its balance sheet ¹⁵.

FullNet Communications Growth Potential

FULO stock appears to be bottoming out and making a turnaround in parallel to improving financials ¹⁵. FullNet Communications stock can easily deliver multibagger gains for investors once it makes a full turnaround, especially as large telecom companies recover and restart expansion plans ¹⁵.

FullNet Communications Financials

FullNet Communications has no debt, with total shareholder equity of $1.6 million and total assets of $3.4 million ¹⁶. The company’s short-term assets ($3.2 million) exceed its short-term liabilities ($1.8 million), and it has no long-term liabilities ¹⁶.

Olo (OLO)

Olo Inc. operates an open SaaS platform for restaurants in the United States ¹⁷. The company provides value-added architectural, engineering, and construction management solutions to optimize facility design and performance ¹⁰.

Olo Company Overview

Olo was founded in 2005 and is headquartered in New York, New York ¹⁰. As of December 31, 2022, the company had 170 full-time employees ⁷. Olo’s leadership team includes CEO Noah Glass, CFO Peter J. Benevides, and CTO Andrew Murray ⁹.

Olo Growth Potential

Olo’s growth potential lies in several key areas:

1. Expanding its presence in the rapidly growing digital ordering and delivery market for restaurants
2. Leveraging its large customer base of over 500 restaurant brands to cross-sell additional products and services
3. Continuing to innovate and enhance its platform to meet evolving customer needs

However, Olo faces increasing competition from other restaurant technology providers and potential customer insourcing of digital ordering capabilities ¹⁸.

Olo Financials

Olo reported revenue of $195.2 million in 2022, a 27% increase from 2021 ¹⁷. The company expects revenue in the range of $215-220 million for 2023, representing 10-13% growth ¹⁷.

While Olo has strong gross margins of 71%, the company remains unprofitable with a -24% operating margin in 2022 ¹⁷. Analysts expect Olo to become profitable within the next few years as it scales its business ¹⁷.

SelectQuote (SLQT)

SelectQuote Inc. operates a technology-enabled, direct-to-consumer distribution platform that sells a range of insurance products and healthcare services in the United States. The company operates through three segments: Senior, Life, and Auto & Home ¹⁹.

SelectQuote Company Overview

Founded in 1999, SelectQuote is headquartered in Overland Park, Kansas, and employs 4,186 people as of 2023 ¹⁹. The company’s leadership team includes CEO Tim Danker, CFO Ryan Clement, and Chief Accounting Officer Stephanie Fisher ¹⁹.

SelectQuote Growth Potential

SelectQuote’s growth potential lies in several key areas:

1. Expanding its presence in the rapidly growing digital ordering and delivery market for insurance products
2. Leveraging its large customer base to cross-sell additional products and services
3. Continuing to innovate and enhance its platform to meet evolving customer needs

However, SelectQuote faces increasing competition from other insurance technology providers and potential customer insourcing of digital ordering capabilities ¹⁹.

SelectQuote Financials

SelectQuote reported revenue of $1.24 billion and a net loss of $50.95 million for the trailing twelve months ended March 31, 2024 ¹⁹. The company’s EBITDA was $55.61 million during the same period ¹⁹.

Analysts have a “Strong Buy” consensus rating for SLQT stock, with an average price target of $3.00, representing a potential upside from the current price ²⁰. However, investors should carefully monitor the company’s financial performance and any potential risks before making an investment decision.

Conclusion

Through an exploration of the dynamic and often overlooked segment of the market, small cap stocks, this article has underscored the notable potential these investments hold for astute investors. By diving into the intricacies of companies like GeneDx, DoubleDown Interactive, Immersion, Acacia Research, CTO Realty Growth, Karat Packaging, urban-gro, FullNet Communications, Olo, and SelectQuote, we’ve painted a diversified picture of opportunity that spans across various industries. Each exemplifies unique strengths, from innovative technology and strategic acquisitions to market leadership and robust financials, positioning them as prime candidates for explosive growth in the near future.

Given the depth of analysis and forecasting provided, investors are equipped with the insights needed to make informed decisions tapping into the promise these small cap stocks represent. Whether it’s the haptic technology advancements of Immersion, the expanding digital footprint of DoubleDown Interactive, or the sustainability initiatives of Karat Packaging, each company illustrates a path to potential success that’s steeped in strategic innovation and market relevance. As the financial landscape continues to evolve, keeping an eye on such transformative small cap stocks could very well be the key to unlocking significant returns.

References

[1] – https://www.nasdaq.com/articles/all-you-need-know-about-genedx-holdings-wgs-rating-upgrade-strong-buy
[2] – https://stockinvest.us/stock/WGS
[3] – https://simplywall.st/stocks/us/media/nasdaq-ddi/doubledown-interactive/future
[4] – https://www.macroaxis.com/invest/advice/DDI
[5] – https://finance.yahoo.com/quote/IMMR/profile/
[6] – https://stockanalysis.com/stocks/immr/forecast/
[7] – https://finance.yahoo.com/quote/ACTG/
[8] – https://www.macroaxis.com/is-acacia-research-stock-a-good-buy
[9] – https://www.reit.com/news/articles/cto-realty-finds-success-through-a-history-of-active-portfolio-management
[10] – https://finance.yahoo.com/quote/KRT/
[11] – https://stockanalysis.com/stocks/krt/forecast/
[12] – https://www.urban-gro.com/company
[13] – https://www.urban-gro.com/news/fourth-quarter-2022-results-2023-guidance
[14] – https://www.nasdaq.com/articles/5-analysts-assess-urban-gro-what-you-need-know
[15] – https://investorplace.com/2024/04/7-small-cap-gems-under-10-primed-for-1000-growth/
[16] – https://simplywall.st/stocks/us/telecom/otc-fulo/fullnet-communications/health
[17] – https://simplywall.st/stocks/us/software/nyse-olo/olo
[18] – https://guastywinds.substack.com/p/olos-dilemma-part-1
[19] – https://pitchbook.com/profiles/company/43112-08
[20] – https://www.macroaxis.com/is-selectquote-stock-a-good-buy