Generally speaking, “small-cap stocks” are companies with a market capitalization between $300 million and $2 billion. Investing in these small-cap firms comes with its own set of drawbacks and benefits.
While small-cap companies typically have much more upside for growth than some of their longer-established, larger-cap counterparts, small-caps also tend to have narrower customer bases, and can be more volatile and less predictable than blue chips on a day to day basis. For investors with a healthy risk appetite, though, the potential reward of investing in small-caps can be worth it.
Heading into 2024, here's a closer look at three members of the S&P SmallCap 600 Index ($IQY) that analysts expect to rally.
Xperi Stock
American multinational technological company Xperi Inc. (XPER) invents, develops, and markets its software solutions for cars and consumer electronics. Its services can be divided into 4 categories: Connected Car, Consumer Electronics, Pay-TV, and Platform Solutions. Its existing portfolio of partners includes luxury brands such as Rolls-Royce, Ferrari (RACE), Lamborghini, Samsung, and Microsoft (MSFT), among others.
Xperi’s stock is up more than 25% over the past year, outperforming its parent S&P 600 index.
Xperi’s recent earnings result reflects the solid year they are having, with revenue increasing 7% YoY from $121.6 million to $130.4 million, while the net loss narrowed by 90% to $31.1 million. Its PAY TV posted double-digit subscriber growth for the 17th consecutive quarter, and Xperi signed long-term renewals illustrating its appeal and demand.
XPER has a consensus “Strong Buy” rating from analysts, with a mean price target of $19.00 - reflecting a 65% potential upside. Out of the 4 analysts covering this stock, 3 have a “Strong Buy” rating and 1 has a “Hold” rating.
Thryv Holdings Stock
Thryv Holdings Inc. (THRY) is a software service company providing SaaS management and print marketing tools. Their services can be separated into 4 categories: U.S. SaaS, International SaaS, U.S. Marketing, and International Marketing.
Thryv’s stock is off about 5% over the past 52 weeks, lagging the broader equities market.
Thryv’s reported Q3 revenue of $67.4 million, representing a 19% increase YoY. SaaS adjusted EBITDA exceeded the consensus outlook by $3 million, bolstered by a rise in revenue. Operational cash flow came in at a solid $45.9 million, and free cash flow allowed them to reduce their debt by a substantial $42.5 million.
Overall, analysts have a bullish outlook on Thryv, with a consensus “Strong Buy” rating and a mean price target of $36.67. That implies expected upside of 100.3% from here. Of the 4 analysts covering the stock, 3 have a “Strong Buy” rating and 1 has a “Moderate Buy” rating.
Green Plains Stock
Green Plains Inc. (GPRE) is a biorefining company processing renewable crops into ethanol (FLG24) products. It produces cleaner carbon biofuel, and high purity alcohol to be used in disinfectants and cleaners while also innovating high-protein and novel ingredients for animal diets to satisfy the growing global appetite.
Green Plains stock has tumbled 24% over the past 52 weeks.
Green Plains posted its Q3 results on Oct. 31, reporting record sales and beating profit estimates. Revenue came in at $892.8 million in comparison to $995.0 million last year, with record sales of high-protein products. The Nebraska-based company reported a profit of $0.35 per share, exceeding analysts’ expectations for a loss of $0.05 per share.
Despite the underwhelming price action, analysts are overwhelmingly bullish on GPRE. The consensus rating is “Strong Buy” with a mean price target of $41.78, indicating nearly 77% upside potential to the current level. Of the 8 analysts currently watching this stock, 6 have a “Strong Buy” rating and 2 have a “Hold” rating.
