16 Most Profitable Small-Cap Stocks Now
In this piece, we will take a look at the 16 most profitable small-cap stocks now. If you want to skip our overview of small cap companies, stocks, and investing, then you can skip ahead to 5 Most Profitable Small-Cap Stocks Now.
Small cap stocks and companies are among the fastest growing sectors of the stock market. Investing, when we look at the best performing returns, is often about buying low and then holding for years. Some of the biggest companies in the world today, namely the big technology mega cap stocks, were once small cap companies too. Investors or employees who were lucky or smart enough to have gained control of their equity back then have become some of the richest people in the world over the course of just a couple of decades.
Yet, just as it the case with every other investment vehicle, small cap stocks also come with their associated risks. Before firms become big, they are vulnerable to the same risks as every other company. Some of these risks include the inability to remain profitable to either invest in future growth or see market share loss accelerate and make accountants and financial planners unable to fund existing operations. For instance, the world's biggest technology company in terms of market value is the Cupertino, California consumer electronics giant Apple Inc. (NASDAQ:AAPL). Apple's latest market value is a whopping $3 trillion, and since 1998, the shares have gained quite a bit in terms of percentage returns. Apple's shares were trading at $27 in May 1998, and since then, the stock has undergone four separate splits. Whether we account for these or not, the end result is a multi hundred thousand percent return for a stock that even Warren Buffett most likely wishes that he had bought earlier.
But while Apple's stunning stock returns almost make the firm seem infallible in 2023, the fact is in 1998 it wasn't quite popular. Back then Apple did not have the comfort of a mega cap stock and had to cut down non performing business divisions to ensure that it had a shot at generating sales at all. The rest is history, but Apple's journey on the stock market is different from most other small cap stocks that are available for trading right now. Apple's shares went public in 1980, and the day of the IPO saw its market value sit at $1.8 billion, which is quite sizeable when we consider the impact of inflation. However, despite IPO'ing at a value that sits right at the cusp of the upper end of small caps, Apple was nevertheless less than ten times as valuable as Microsoft Corporation (NASDAQ:MSFT) whose value sat at $261 billion in September 1998. Now, the picture is different, and those who even owned a mere $1,000 of Apple's stock in 1998 have seen their money become worth hundreds of thousands of dollars more.
This is the promise of small cap stocks, and any possible intention to emulate the stunning returns offered by the top companies of today requires patience and luck. After all, if everyone knew which company was the next Apple, then the shares would already have crossed the mega cap barrier, and this assumes that it's possible for another Apple to emerge in the first place. Secondly, small caps are quite vulnerable to losses in turbulent economic conditions, as has been the case throughout 2023. For instance, while Apple's shares are up by 54% year to date, the S&P 600 small cap stock index is up by a more modest 15.9%. Yet, since late October, the small cap stock index has posted greater returns in the wake of the latest shift in investor sentiment about the Federal Reserve's future interest rate decisions.
So, as 2023 comes to an end, we decided to look at the most profitable small cap stocks. The top three most profitable stocks are Vital Energy, Inc. (NYSE:VTLE), Fidelis Insurance Holdings Limited (NYSE:FIHL), and Daqo New Energy Corp. (NYSE:DQ).
Our Methodology
To compile our list of the most profitable small cap stocks we ranked the small cap stocks that trade on the NASDAQ and NYSE stock exchanges and in our previous coverage by their U.S. dollar trailing twelve month net income and picked out the small cap stocks with the highest profit.
For these stocks we have also mentioned hedge fund sentiment. Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here). That’s why we pay very close attention to this often-ignored indicator.
16 Most Profitable Small-Cap Stocks Now
16. Textainer Group Holdings Limited (NYSE:TGH)
Trailing Twelve Month Net Income: $211 million
Textainer Group Holdings Limited (NYSE:TGH) is a trade and logistics company that provides business customers containers on lease to ship their products worldwide. Its financial performance is tightly related to the global shipping industry, which is famous for its cyclical ups and downswings.
As of Q3 2023 end, 11 out of the 910 hedge funds part of Insider Monkey's database had bought and owned a stake in Textainer Group Holdings Limited (NYSE:TGH). Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital was the firm's largest hedge fund shareholder due to its $19.1 million stake.
Just like Fidelis Insurance Holdings Limited (NYSE:FIHL), Vital Energy, Inc. (NYSE:VTLE), and Daqo New Energy Corp. (NYSE:DQ), Textainer Group Holdings Limited (NYSE:TGH) is one of the most profitable small cap stocks.
15. RPC, Inc. (NYSE:RES)
Trailing Twelve Month Net Income: $238 million
RPC, Inc. (NYSE:RES) provides oil production and well maintenance services to the petroleum exploration industry. It's one of the weakest stocks on our list in terms of analyst ratings, which is reflected through an average score of Hold.
By the end of September 2023, 15 out of the 910 hedge funds profiled by Insider Monkey were the firm's shareholders. RPC, Inc. (NYSE:RES)'s biggest investor among these is Mario Gabelli's GAMCO Investors due to its $27.2 million stake.
14. Century Communities, Inc. (NYSE:CCS)
Trailing Twelve Month Net Income: $247 million
Century Communities, Inc. (NYSE:CCS) is an American home building company headquartered in Greenwich Village, Coloardo. December 2023 came with some bad news for its shares as Wedbush cut the share price target to $81 from $89 and reduced the rating to Neutral from Outperform.
During this year's September quarter, 21 out of the 910 hedge funds covered by Insider Monkey's research had invested in Century Communities, Inc. (NYSE:CCS). Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital was the largest shareholders as it owned $24.8 million worth of shares.
13. FinVolution Group (NYSE:FINV)
Trailing Twelve Month Net Income: $335 million
FinVolution Group (NYSE:FINV) is a Chinese financial technology company that enables borrowers and lenders to connect with each other. Its third quarter provided a mixed bag of results as while revenue grew by 7.6% annually, net income dropped by 5.1%.
For their third quarter of 2023 shareholdings, nine out of the 910 hedge funds surveyed by Insider Monkey were the firm's shareholders. FinVolution Group (NYSE:FINV)'s biggest investor among these is Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital courtesy of its $12.7 million investment.
12. VEON Ltd. (NASDAQ:VEON)
Trailing Twelve Month Net Income: $439 million
VEON Ltd. (NASDAQ:VEON) is a Dutch telecommunications company that provides voice, internet, and other coverage options. December 2023 was an important month for the company as it had to deal with the effects of a cyberattack that disrupted telecommunications.
As of Q3 2023 end, just three out of the 910 hedge funds covered by Insider Monkey's research had invested in VEON Ltd. (NASDAQ:VEON). Himanshu H. Shah's Shah Capital Management is the biggest investor due to its $75.6 million stake.
11. Costamare Inc. (NYSE:CMRE)
Trailing Twelve Month Net Income: $444 million
Costamare Inc. (NYSE:CMRE) is an ocean shipping company with more than five dozen vessels in its fleet. Stifel, Citigroup, and Jefferies have set an average share price target of $10.52 for the firm and kept a Buy rating on average.
During this year's third quarter, three out of the 910 hedge funds part of Insider Monkey's database had held a stake in the company. Costamare Inc. (NYSE:CMRE)'s largest stakeholder is Jim Simons' Renaissance Technologies as it owns 1.6 million shares that are worth $16.1 million.
10. M/I Homes, Inc. (NYSE:MHO)
Trailing Twelve Month Net Income: $490 million
M/I Homes, Inc. (NYSE:MHO) is a home building company with operations in several American states. It has been doing well on the financial front as of late by having beaten analyst EPS estimates in all four of its latest quarters.
Insider Monkey scoured through 910 hedge fund portfolios for 2023's September quarter and found 28 M/I Homes, Inc. (NYSE:MHO) shareholders. Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital was the biggest investor due to its $59.2 million stake.
9. Bread Financial Holdings, Inc. (NYSE:BFH)
Trailing Twelve Month Net Income: $541 million
Bread Financial Holdings, Inc. (NYSE:BFH) is an American financial services provider headquartered in Columbus, Ohio. The shares are rated Buy on average and the average analyst share price target is $33.33.
By the end of this year's third quarter, 24 out of the 910 hedge funds covered by Insider Monkey's database had bought Bread Financial Holdings, Inc. (NYSE:BFH)'s shares. Andrew Wellington And Jeff Keswin's Lyrical Asset Management was the largest shareholder due to its $51.2 million investment.
8. Teekay Tankers Ltd. (NYSE:TNK)
Trailing Twelve Month Net Income: $548 million
Teekay Tankers Ltd. (NYSE:TNK) is an oil transportation company headquartered in Hamilton, Bermuda. Nearly 80% of its stock is held either by institutional investors or insiders, making the shares vulnerable to large downswings.
Insider Monkey dug through 910 hedge fund portfolios for their September quarter of 2023 shareholdings and discovered that 20 were the firm's shareholders. Teekay Tankers Ltd. (NYSE:TNK)'s biggest investor in our database is Israel Englander's Millennium Management as it owns $26.6 million worth of shares.
7. JinkoSolar Holding Co., Ltd. (NYSE:JKS)
Trailing Twelve Month Net Income: $570 million
JinkoSolar Holding Co., Ltd. (NYSE:JKS) is a Chinese solar power company headquartered in Shangrao, China. It has beaten analyst EPS estimates in three out of its four latest quarters and the shares are rated Buy on average.
As of Q3 2023 end, 12 out of the 910 hedge funds covered by Insider Monkey's database had invested in JinkoSolar Holding Co., Ltd. (NYSE:JKS). Paul Marshall and Ian Wace's Marshall Wace LLP was the largest shareholder as it owned 730,841 shares that are worth $22.1 million.
6. Danaos Corporation (NYSE:DAC)
Trailing Twelve Month Net Income: $579 million
Danaos Corporation (NYSE:DAC) is a Greek company capable of shipping hundreds of thousands of containers all over the world. A weakening global economic environment in the form of high inflation and interest rates led to the firm's operating revenue dropping annually during the third quarter.
During the same time period, ten out of the 910 hedge funds tracked by Insider Monkey had held a stake in the company. Danaos Corporation (NYSE:DAC)'s biggest investor in our database is Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital as it owns $18.2 million worth of shares.
Vital Energy, Inc. (NYSE:VTLE), Danaos Corporation (NYSE:DAC), Fidelis Insurance Holdings Limited (NYSE:FIHL), and Daqo New Energy Corp. (NYSE:DQ) are some highly profitable small cap stocks.
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Disclosure: None. 16 Most Profitable Small-Cap Stocks Now is originally published on Insider Monkey.