11 Best Small-Cap Growth Stocks to Invest In

Ramish Cheema
8 min read

In This Article:

In this piece, we will take a look at the 11 best small-cap growth stocks to invest in. If you want to skip our primer about the benefits and drawbacks of investing in small cap stocks, then you can take a look at the 5 Best Small-Cap Growth Stocks to Invest In.

The small cap sector of the stock market gets significantly lower coverage than compared to mega caps such as Apple and Microsoft. This is understandable since the latter category of stocks are of big companies that are global brand names. However, the sizeable nature of mega caps renders them weak when we consider the potential for returns. While there are some exceptions, higher share prices mean that not only is a stock less likely to make high double or triple digit percentage returns, but also since the stock is too expensive, there will be limited liquidity despite the fact that several shares are also sold in units.

On the flip side, small cap stocks, which are those with a market capitalization less than $2 billion, come with their own set of risks. These are smaller firms, with balance sheets unlikely to cross a billion dollars in total assets. Naturally, their size is due to the fact that when compared to firms such as the semiconductor firm AMD or the consumer defensive retail giant Walmart Inc. (NYSE:WMT), small cap stocks often have markets that are geographically limited.

A great example of this bifurcation in market size that also contributes to sizeable differences in market value is the financial services industry. With this industry, we have large caps such as the world's largest private bank in terms of assets, the New York City banking behemoth JPMorgan Chase & Co. (NYSE:JPM) as well as small cap banks such as the Miami Lakes, Florida based regional bank BankUnited, Inc. (NYSE:BKU). The sizeable difference in these two banks, which both belong to the same industry but only the latter is a small cap stock is clear when we look at their total assets as of December 2023. JPMK503B

For JPMorgan, the world's biggest bank had unbelievable total assets of a stunning $3.6 trillion - larger than the assets of several countries. On the other hand, BankUnited's balance sheet totaled at $37 billion - or less than the total value of Elon Musk's Tesla, Inc. (NASDAQ:TSLA) stake.

Since investing in stocks is all about returns, the next step when analyzing small cap stocks is to see how their performance differs from large or mega cap behemoths. After all, the fact that JPMorgan's market capitalization sits at $504 billion while UnitedBank is worth $1.99 billion ought to influence returns in some way. Well, continuing with our take on the financial services small cap stocks, in terms of 12 month percentage share price gains, the top three financial services stocks as of recent share price performance are American Coastal Insurance Corporation (NASDAQ:ACIC), Prairie Operating Co. (NASDAQ:PROP), and CleanSpark, Inc. (NASDAQ:CLSK). Their shares have appreciated by 961%, 336%, and 374% over the past twelve months, in a nice set of results that eclipse the gains of the magnificent seven A.I. semiconductor stock darling NVIDIA Corporation (NASDAQ:NVDA).

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