Yahoo Finance 3 Top-Ranked Small-Caps Investors Shouldn't Ignore
Small-caps have rebounded nicely so far in 2023, undoubtedly a welcomed development among market participants after a rough showing last year.
Still, there is a lot of negative sentiment surrounding the stocks due to their volatile nature at times.
However, many small-cap stocks turn out to be big winners in the long run, and they typically have less analyst coverage, providing investors an opportunity to get in "early" before the crowd.
For those seeking exposure to small-caps, three stocks – Turtle Beach HEAR, Wingstop WING, and Horizon Technology Finance HRZN – could all be considerations.
All three sport a favorable Zacks Rank, indicating optimism among analysts. Let’s take a closer look at each.
Wingstop
Wingstop offers cooked-to-order, hand-sauced, and tossed chicken wings. Currently, the stock carries a favorable Zacks Rank #1 (Strong Buy), with earnings expectations increasing across the board.
Image Source: Zacks Investment Research
The company has posted robust quarterly results as of late, exceeding the Zacks Consensus EPS Estimate by an average of 31% over the last four quarters. Just in its latest release, Wingstop penciled in a 29% EPS beat and reported revenue 7.7% above expectations.
As shown below, the company’s revenue growth has been remarkable.
Image Source: Zacks Investment Research
It’s worth noting that investors will have to fork up a premium for WING shares, with the current 92.4X forward earnings multiple undoubtedly expensive. Still, investors have had little issue paying the premium given the company’s strong growth trajectory.
Turtle Beach
Turtle Beach Corporation, a Zacks Rank #2 (Buy), is an audio technology company that designs products for consumer, commercial, and healthcare markets.
Like WING, Turtle Beach posted results that came in well above expectations in its latest release, exceeding the Zacks Consensus EPS Estimate by more than 35%. Quarterly revenue totaled $51 million, 12% ahead of expectations and improving nearly 10% from the year-ago period.
Shares aren’t stretched regarding valuation, with the current 0.7X forward price-to-sales ratio sitting beneath the 0.8X five-year median and highs of 1.6X in 2021. The stock carries a Style Score of “B” for Value.
Image Source: Zacks Investment Research
Keep an eye out for the company’s next quarterly release on August 14th; the Zacks Consensus EPS Estimate of -$0.33 indicates a 57% jump in earnings from the year-ago period.
Horizon Technology Finance
Horizon Technology Finance makes secured loans to development-stage companies in the technology, life science, healthcare information and services, and cleantech industries. The stock sports the highly-coveted Zacks Rank #1 (Strong Buy), with the revisions trend particularly noteworthy for its current fiscal year.
Image Source: Zacks Investment Research
For those seeking income, HRZN has that covered; shares currently yield 10.8% annually, crushing the Zacks Finance sector average of an already impressive 2.6%. Dividend growth is there, too, with the company’s payout growing modestly over the last five years.
Image Source: Zacks Investment Research
Bottom Line
With small-caps staging a significant rebound in 2023, investors are undoubtedly looking to ride the trend.
And for those seeking exposure, all three stocks above – Turtle Beach HEAR, Wingstop WING, and Horizon Technology Finance HRZN – deserve a watchlist spot.
All three have witnessed positive earnings estimate revisions among analysts, indicating near-term optimism.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Horizon Technology Finance Corporation (HRZN) : Free Stock Analysis Report
Wingstop Inc. (WING) : Free Stock Analysis Report
Turtle Beach Corporation (HEAR) : Free Stock Analysis Report
