Small-cap stocks are public companies that have market capitalizations ranging from $300 million to $2 billion. Since the share prices of these companies can be very volatile, some companies in the small-cap universe, or in small-cap indexes, can have market caps significantly higher than this range at any particular time. Some of the stocks classified as small caps are movie theater chain AMC Entertainment Holdings Inc. (AMC), printing, imaging company Eastman Kodak Co. (KODK), and retail drug store chain Rite Aid Corp. (RAD).

Small-cap stocks, as represented by the Russell 2000 Index, have outperformed the broader market, providing investors with a total return of 49.2% compared to the Russell 1000's total return of 39.4% over the past 12 months. These market performance numbers and the statistics in the tables below are as of July 27, 2021.

Here are the top three small-cap stocks with the best value, fastest growth, and the most momentum. The market valuations of some of the companies listed below are above the generally agreed upper limit of $2 billion for a stock to be considered small cap. This tends to happen in periods of higher volatility, especially for momentum stocks. However, they are still classified as small cap because stocks are not re-indexed as rapidly as their price movement. Their valuations may drop later as volatility subsides.

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 ($) Market Cap ($B) 12-Month Trailing P/E Ratio
California Resources Corp. (CRC) 27.09 2.3 0.6
Dynex Capital Inc. (DX) 17.44 0.5 1.1
Hovnanian Enterprises Inc. (HOV) 93.22 0.6 1.2

Source: YCharts

  • California Resources Corp.: California Resources is an oil and natural gas exploration and production (E&P) company with operations in California. It produces crude oil, natural gas, and natural gas liquids (NGL). It also operates a power plant that generates electricity from natural gas.
  • Dynex Capital Inc.: Dynex Capital is a real estate investment trust (REIT) that invests in mortgage loans and securities on a leveraged basis. It has investments in both residential and commercial securitized mortgage loans.
  • Hovnanian Enterprises Inc.: Hovnanian Enterprises is a homebuilding company. It designs, constructs, and markets a variety of for-sale housing in residential communities in 14 states. The company announced in early June financial results for Q2 of its 2021 fiscal year (FY), the three-month period ended April 30, 2021. Net income soared to $488.7 million from $4.1 million in the year-ago quarter as revenue rose 30.6%. Net income was primarily boosted by $457.6 million worth of state and federal income tax benefits.

Fastest Growing Small-Cap Stocks

These are the top small-cap stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and their most recent quarterly YOY earnings per share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.

Fastest Growing Small-Cap Stocks
  Price ($) Market Cap ($B) EPS Growth (%) Revenue Growth (%)
Live Oak Bancshares Inc. (LOB) 61.31 2.7 1,470 122.9
Renasant Corp. (RNST) 36.58 2.1 2,450 32.3
Nautilus Inc. (NLS) 15.66 0.5 1,230 119.9

Source: YCharts

  • Live Oak Bancshares Inc.: Live Oak Bancshares is a digital, cloud-based bank that offers financial products and services, such as loans and savings accounts. It primarily serves small business owners in the U.S. The company announced at the end of June the appointment of William C. Losch III as chief financial officer (CFO), effective Sept. 1, 2021. Losch previously was senior executive vice president and CFO for 12 years at First Horizon Corp. (FHN). He will replace Brett Caines, who will remain in a senior role and focus on strategy development.
  • Renasant Corp.: Renasant is a financial services company. It operates more than 200 banking, mortgage, financial services, and insurance offices in various states throughout the U.S.
  • Nautilus Inc.: Nautilus designs and sells fitness equipment, including indoor bikes, treadmills, ellipticals, home gyms, and adjustable all-in-one free weights systems. It also offers a digital fitness platform that adapts to the user's ability and mood. The company announced in May financial results for Q2 FY 2021, the three-month period ended March 31, 2021. Net income rose 1,292.1% on net sales growth of 119.9% compared to the year-ago quarter. Total operating expenses grew much slower than net sales, boosting net income.

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
  Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
Cassava Sciences Inc. (SAVA) 127.50 5.1 3,570
California Resources Corp. (CRC) 27.09 2.3 2,200
Marathon Digital Holdings Inc. (MARA) 27.02 2.7 1,800
Russell 1000  N/A N/A 39.4
Russell 2000 N/A N/A 49.2

Source: YCharts

  • Cassava Sciences Inc.: Cassava Sciences is a clinical-stage biopharmaceutical company focused on developing drugs for the treatment of nervous system disorders, such as Alzheimer's disease.
  • California Resources Corp.: See above for company description.
  • Marathon Digital Holdings Inc.: Marathon Digital Holdings is primarily engaged in the mining of cryptocurrencies. Its main focus is on the blockchain ecosystem and the generation of digital assets. The company announced in May financial results for Q1 FY 2021, the three-month period ended March 31, 2021. Net income was $83.4 million, a significant turnaround from the net loss of $1.1 million in the year-ago quarter. Net income was boosted by a $132 million unrealized gain from the change in value of the company's $150 million investment in Bitcoin. The investment was made in January 2021. Revenue for the quarter rose 1,444.8%.

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