Small-caps have rebounded nicely so far in 2023, undoubtedly a welcomed development among market participants after a rough showing last year.
As many know, small-caps’ volatile nature can sometimes turn investors away.
However, many small-cap stocks turn out to be big winners in the long run, and they typically have less mainstream coverage, providing investors an opportunity to get in "early" before the crowd.
For those seeking exposure to small-caps, three stocks – BJ’s Restaurants BJRI, GigaCloud Technology GCT, and Heritage Insurance Holdings HRTG – could all be considered.
All three sport a favorable Zacks Rank, indicating optimism among analysts. Let’s take a closer look at each.
BJ’s Restaurants
BJ's Restaurants, a current Zacks Rank #1 (Strong Buy), owns and operates a chain of high-end casual dining restaurants in the U.S. Analysts have taken their earnings expectations higher across all timeframes.
Image Source: Zacks Investment Research
The company’s earnings are forecasted to soar 430% on 5.5% higher revenues in its current year, likely reflecting effective cost controls. And looking ahead to FY24, estimates allude to a further 57% earnings improvement paired with a 4% sales bump.
Image Source: Zacks Investment Research
GigaCloud Technology
GigaCloud Technology Inc. is a pioneer of global end-to-end B2B e-commerce solutions for large parcel merchandise. The company’s earnings outlook has improved nearly across the board, landing it into a favorable Zacks Rank #1 (Strong Buy).
Image Source: Zacks Investment Research
Shares don’t appear stretched regarding valuation given the company’s forecasted growth, currently trading at a 7.9X forward earnings multiple (F1). GigaCloud Technology’s earnings are forecasted to improve by more than 160% on 22% higher sales in its current year.
GCT posted results well above expectations in its latest release, exceeding the Zacks Consensus EPS Estimate by more than 20%. Quarterly revenue totaled $153 million, 9% ahead of expectations.
Shares saw bullish activity post-earnings, as illustrated by the green arrow in the chart below.
Image Source: Zacks Investment Research
Heritage Insurance Holdings
Heritage Insurance Holdings is a property and casualty insurance holding company. The company’s earnings outlook has turned bright, landing the stock into a Zacks Rank #2 (Buy).
Image Source: Zacks Investment Research
It’s nearly impossible to ignore the company’s growth profile, with earnings forecasted to soar 150% in its current year and an additional 9% in FY24. Revenue growth is also apparent, suggested to climb 10% in FY23 and 3% in FY24.
Like GCT, Heritage Insurance shares could interest value-conscious investors, with the current 4.4X forward earnings multiple (F1) sitting on the lower end of the spectrum. The stock sports a Style Score of “B” for Value.
The company is coming off a robust quarterly report; HRTG exceeded the Zacks Consensus EPS Estimate by a sizable 540% and reported revenue 10% ahead of expectations. HRTG has enjoyed a recent acceleration in top line growth, as we can see below.
Image Source: Zacks Investment Research
Bottom Line
Small-cap stocks could be solid considerations for those who can handle a higher level of volatility and have a less conservative approach.
While their price swings can undoubtedly become spooky, their growth potential is impressive.
And all three above – BJ’s Restaurants BJRI, GigaCloud Technology GCT, and Heritage Insurance Holdings HRTG – boast strong growth trajectories paired with improved earnings outlooks.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
