Global share prices are seeing unprecedented gains. The rally appears to be extending beyond the big names, putting the spotlight on high-growth small-caps.
Much of the gains in the first half of the year have been powered by mega-cap stocks- and with good reason. Tech juggernauts like Nvidia (NASDAQ:NVDA) are experiencing massive growth- pushing its share price to new highs.
However, with much of the wealth concentrated among a small group of big names, it can be easy to overlook the potential of smaller stocks. These perpetual under-dogs aka small-caps have a market cap ranging from $250 million to $3 billion. They offer high growth potential but with the added risk of volatility.
As the broader markets rise, several small-cap stocks are seeing massive gains. Some have even seen a 100% revenue growth in the past year- making them attractive opportunities for investors willing to take on more risk for higher returns. Moreover, small-caps can help balance out portfolios because they tend to perform well in bear markets.
Small-Caps with Growth Potential: ACM Research (ACM)
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One stock that’s high on investor’s radar is ACM Research (NASDAQ:ACMR). The company caters to today’s chip-centric era with the product required to clean silicon wafers during production. This is a crucial element required by semiconductor manufacturers to remove the contaminants in their circuits.
As the chip wars heat up, ACM Research’s offering is more relevant than ever enabling the company to generate a robust deal pipeline and expand in markets beyond China. This growth was evident in its recent earnings where revenue was up a whopping 105% from last year. Net income followed a similar trajectory, coming in at $17.43 million, up from $7.14 in the prior year. In terms of guidance, ACMR expects revenue to fall in the $650 million to $725 million range.
While the results paint an optimistic picture, one potential headwind is the rising geopolitical tensions between China and the U.S. This could hinder chip sales in the region. Nevertheless, ACMR’s long-term potential remains robust. This is underscored by a massive uptick in shipments (up 175% in Q1) and strong revenue growth.
Alarum Technologies Ltd (ALAR)
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Alarum Technologies Ltd (NASDAQ:ALAR) is in the business of internet access and web data acquisitions. The company’s competitive edge lies in its NetNut suite of solutions that uses a hybrid proxy network to provide robust security measures. This software ensures users have privacy, protection and speed when browsing on private servers.
Since its inception, the company has introduced a series of new product offerings. Among these is the search engine results page (SERP) scraper API which automates the retrieval and analysis of search engine data for better SEO. More recently, ALAR announced an AI data collection tool that would use a no-code interface to streamline data collection.
Coming to the financials, which are just as impressive as its products. In its first quarter, revenue was up by 139% at $8.1 million. Alarum also recorded a net profit of $1.4 million- marking a strong improvement from a net loss in the prior year. Looking ahead, the company hopes to keep the momentum going with several product launches this year.
High-growth small-caps like ALAR are a good buy for investors willing to bank on its massive potential.
Enovix (ENVX)
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Enovix (NASDAQ:ENVX) is redefining the battery industry with the development of silicon-anode-lithium-ion batteries. That’s a mouthful but put in simple terms, it’s disrupting the battery technology space. The company prides itself on the diverse utility of its lithium batteries which can be used in almost anything from military equipment to cameras and PCs.
This promising potential fueled bullish sentiments amongst industry experts. As per analyst estimates, ENVX stock price is projected to double to $30.3. And while that may seem like an exaggerated value, its financials help add some color.
Revenue for the last twelve months grew by 107% and this wasn’t even the wildest metric in the report. Revenue in the first quarter was up by a whopping 25,004.76%. This growth can be attributed to the company’s ability to produce various battery geometries and a strong sales pipeline.
Based on analysts’ Strong Buy rating and lucrative supply deals secured, ENVX is undoubtedly one of the best High-Growth Small-Cap Stocks on the market.
On the date of publication, Divya Premkumar 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
