Small cap stocks are listed companies that have market capitalizations typically ranging from $300 million to $2 billion. Since the share prices of these companies can have big fluctuations over a short period of time, companies with market caps of up to $10 billion are also found in the small cap universe. Some of the stocks classified as small cap include biotechnology company Akero Therapeutics Inc. (AKRO), Tupperware Brands Corp. (TUP), and cloud-computing business Fastly Inc. (FSLY).
Small Cap stocks, as represented by the Russell 2000 Index (RUT), have underperformed the broader market. RUT has provided a total return of 0.7% over the past 12 months, well below the Russell 1000's total return of 16.2%, as of September 28, 2020. All statistics in the tables below are as of September 29.
Here are the top 3 small cap stocks with the best value, the fastest earnings growth, and the most momentum.
Best Value Small Cap Stocks
These are the small cap stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
|Best Value Small Cap Stocks|
|Price ($)||Market Cap ($M)||12-Month Trailing P/E Ratio|
|Unisys Corp. (UIS)||10.75||677.4||0.7|
|XBiotech Inc. (XBIT)||19.39||562.1||1.2|
|VirnetX Holding Corp. (VHC)||5.16||366.7||1.3|
- Unisys Corp.: Unisys is an information technology (IT) consulting services company. The company provides data analytics, mobility, network, security, and outsourcing services for a range of clients globally.
- XBiotech Inc.: XBiotech is a biopharmaceutical company that discovers, develops, and commercializes monoclonal antibodies for treating a variety of diseases, including cancer, vascular disease, inflammatory skin disease, and diabetes. The company announced at the end of August that the Food and Drug Administration (FDA) had issued an emergency use authorization (EUA) for its COVID-19 Convalescent Plasma as a treatment for COVID-19.
- VirnetX Holding Corp.: VirnetX, through its subsidiaries, develops software to facilitate real-time communications online. This includes voice over internet protocol, encryption, file transfer, streaming, and similar services.
Fastest Growing Small Cap Stocks
These are the small cap stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
|Fastest Growing Small Cap Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)|
|Big Lots Inc. (BIG)||47.76||1.9||6,960|
|TTM Technologies Inc. (TTMI)||11.44||1.2||5,870|
|Textainer Group Holdings Ltd. (TGH)||13.99||0.7||2,900|
- Big Lots Inc.: Big Lots operates retail stores. The company offers an assortment of merchandise, including consumables, seasonal products, furniture, electronics, housewares, toys, and more.
- TTM Technologies Inc.: TTM manufactures circuit boards for use in a variety of electronics products, including routers, servers, memory modules, and cellular base stations. The company reported net income growth of 5,531.1% on net sales growth of 8.2% in Q2 2020, which ended June 29, 2020. Net income received a significant boost from income from discontinued operations. TTM said that it expects to continue experiencing the negative effects, including operational inefficiencies, due to the COVID-19 pandemic.
- Textainer Group Holdings Ltd.: Textainer Group is a holding company whose subsidiaries lease intermodal shipping containers. Its primary business is the leasing of dry freight containers. The company posted net income of $16.3 million in Q2 2020 ended June 30, 2020, compared to a net loss of $0.3 million in the year-ago quarter. Net income was boosted by lower operating expenses compared to the same quarter a year ago as revenue fell 7.3%. The company said that it was starting to see a significant increase in the demand for containers following the slowdown caused by the pandemic earlier in the year.
Small Cap Stocks with the Most Momentum
These are the small cap stocks that had the highest total return over the last 12 months.
|Small Cap Stocks with the Most Momentum|
|Market Cap ($M)||12-Month Trailing Total Return (%)|
|Vaxart Inc. (VXRT)||7.00||764.4||2,160|
|Novavax Inc. (NVAX)||111.18||6,813||1,870|
|Co-Diagnostics Inc. (CODX)||14.20||398.8||1,230|
- Vaxart Inc.: Vaxart is a clinical-stage biotechnology company that develops oral recombinant vaccines that operate on the immune system of the gut. Vaxart reported a net loss of $9.0 million in Q2 2020 ended June 30, 2020, compared to a net loss of $5.6 million in the year-ago quarter. Revenue for the quarter rose 515.3%. Net income was adversely affected by higher operating expenses compared to the same quarter a year ago. The company recently received FDA clearance for Phase 1 of its clinical trial for an oral COVID-19 vaccine.
- Novavax Inc.: Novavax is a clinical stage biotechnology company that creates vaccines to address a wide range of infectious diseases using proprietary virus-like particle (VLP) technology. The company recently announced that it has initiated its first Phase 3 study to evaluate NVX-CoV2373, the company's COVID-19 vaccine candidate. The trial is being conducted in the U.K., in partnership with the U.K. Government's Vaccine Taskforce.
- Co-Diagnostics Inc.: Co-Diagnostics operates as a molecular diagnostics company that develops and manufactures diagnostics technology. The company's diagnostics systems enable molecular testing for organisms and genetic diseases.
YCharts. "Financial Data." Accessed Sep. 29, 2020.
XBiotech Inc. "XBiotech-Developed COVID-19 Test Supports Convalescent Blood Treatments Now Approved Under FDA Emergency Use Authorization." Accessed Sep. 29, 2020.
TTM Technologies Inc. "TTM Technologies, Inc. Reports Fiscal Second Quarter 2020 Results." Accessed Sep. 29, 2020.
Textainer Group Holdings Ltd. "Textainer Group Holdings Limited Reports Second-Quarter 2020 Results." Accessed Sep. 29, 2020.
Vaxart Inc. "Vaxart Announces Second Quarter 2020 Results." Accessed Sep. 29, 2020.
Vaxart Inc. "Vaxart Announces FDA Clearance of IND Application for Oral COVID-19 Vaccine and Provides Update on COVID-19 Program." Accessed Sep. 29, 2020.
Novavax Inc. "Clinical trial to enroll up to 10,000 volunteers across the UK to assess whether NVX-CoV2373 is effective in the prevention of COVID-19." Accessed Sep. 29, 2020.