Many investors prefer to park cash in small-cap stocks (market cap of less than $1 billion), and for an easy-to-understand reason: we all want to be among the first to get in on the next big thing.
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.
Three small-caps with inspiring growth trajectories – Select Energy Services Inc. (WTTR - Free Report) , OneSpaWorld Holdings Ltd. (OSW - Free Report) , and Teekay Tankers Ltd. (TNK - Free Report) – could all be solid considerations for small-cap investors to add to their watchlists.
Below is a chart illustrating the performance of all three stocks over the last year, with the S&P 500 blended in as a benchmark.
Let’s take a closer look at each one and its forecasted growth.
Teekay Tankers Ltd.
Teekay Tankers was formed by Teekay Corporation to provide international marine transportation of crude oil. Currently, TNK boasts a Zacks Rank #2 (Buy).
It’s impossible to ignore the company’s growth profile, with earnings forecasted to soar 240% in its current fiscal year (FY22) and a further 140% in FY23.
The projected earnings growth comes paired with forecasted Y/Y revenue upticks of 160% in FY22 and 93% in FY23.
Even with strong projected growth, TNK shares aren’t expensive; the company’s shares trade at a forward price-to-sales ratio of 0.9X, precisely in line with the five-year median and nicely beneath its Zacks sector average.
TNK carries a Style Score of “B” for Value.
And for the cherry on top, a favorable business environment has led to an increase in cash-generating abilities; in its latest release, TNK generated free cash flow of $67 million, growing 62% sequentially.
As we can see in the chart below, the company’s free cash flow has recovered nicely from 2021 lows.
OneSpaWorld Holdings Ltd.
OneSpaWorld is a provider and innovator in the fields of wellness, beauty, rejuvenation, and transformation on cruise ships and on land. Analysts have taken a bullish stance on the company’s bottom line outlook, pushing the stock into a Zacks Rank #1 (Strong Buy).
For the company’s current fiscal year (FY22), the Zacks Consensus EPS Estimate of $0.25 indicates a sizable 150% uptick in earnings Y/Y. And in FY23, estimates call for a further 90% of earnings growth.
OneSpaWorld’s’ top line is in fantastic shape as well, forecasted to expand nearly 280% in FY22 and 25% in FY23.
In addition, OSW has a highly impressive earnings track record, exceeding the Zacks Consensus EPS Estimate by an average of 84% over its last four.
Just in its latest release, OneSpaWorld penciled in a 115% bottom line beat paired with a 21% revenue surprise. Below is a chart illustrating the company’s revenue on a quarterly basis.
Select Energy Services Inc.
Select Energy Services provides water solutions to the U.S. unconventional oil and gas industry. Presently, WTTR carries a Zacks Rank #2 (Buy).
Like the companies above, WTTR’s top and bottom lines look to expand significantly; estimates suggest a Y/Y earnings increase of 230% in its current fiscal year and 90% in FY23.
Looking at the top line, forecasts call for Y/Y revenue upticks of 82% and 26% in FY22 and FY23, respectively.
The stock also pays a solid dividend, currently yielding 2.4% annually.
Bottom Line
Small-caps can get a bad rep due to their spooky price swings. Still, the negative sentiment feels overdone, as many of these stocks turn out to be long-term winners.
In addition, many small-caps carry less analyst coverage, giving investors a head start before others catch on.
All three small-caps above – Select Energy Services Inc. (WTTR - Free Report) , OneSpaWorld Holdings Ltd. (OSW - Free Report) , and Teekay Tankers Ltd. (TNK - Free Report) – boast strong Zacks Ranks and have outperformed the general market over the last year, indicating positive momentum.
And, of course, all three are forecasted to witness significant earnings and revenue growth.
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Many investors prefer to park cash in small-cap stocks (market cap of less than $1 billion), and for an easy-to-understand reason: we all want to be among the first to get in on the next big thing.
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.
Three small-caps with inspiring growth trajectories – Select Energy Services Inc. (WTTR - Free Report) , OneSpaWorld Holdings Ltd. (OSW - Free Report) , and Teekay Tankers Ltd. (TNK - Free Report) – could all be solid considerations for small-cap investors to add to their watchlists.
Below is a chart illustrating the performance of all three stocks over the last year, with the S&P 500 blended in as a benchmark.
Let’s take a closer look at each one and its forecasted growth.
Teekay Tankers Ltd.
Teekay Tankers was formed by Teekay Corporation to provide international marine transportation of crude oil. Currently, TNK boasts a Zacks Rank #2 (Buy).
It’s impossible to ignore the company’s growth profile, with earnings forecasted to soar 240% in its current fiscal year (FY22) and a further 140% in FY23.
The projected earnings growth comes paired with forecasted Y/Y revenue upticks of 160% in FY22 and 93% in FY23.
Even with strong projected growth, TNK shares aren’t expensive; the company’s shares trade at a forward price-to-sales ratio of 0.9X, precisely in line with the five-year median and nicely beneath its Zacks sector average.
TNK carries a Style Score of “B” for Value.
And for the cherry on top, a favorable business environment has led to an increase in cash-generating abilities; in its latest release, TNK generated free cash flow of $67 million, growing 62% sequentially.
As we can see in the chart below, the company’s free cash flow has recovered nicely from 2021 lows.
OneSpaWorld Holdings Ltd.
OneSpaWorld is a provider and innovator in the fields of wellness, beauty, rejuvenation, and transformation on cruise ships and on land. Analysts have taken a bullish stance on the company’s bottom line outlook, pushing the stock into a Zacks Rank #1 (Strong Buy).
For the company’s current fiscal year (FY22), the Zacks Consensus EPS Estimate of $0.25 indicates a sizable 150% uptick in earnings Y/Y. And in FY23, estimates call for a further 90% of earnings growth.
OneSpaWorld’s’ top line is in fantastic shape as well, forecasted to expand nearly 280% in FY22 and 25% in FY23.
In addition, OSW has a highly impressive earnings track record, exceeding the Zacks Consensus EPS Estimate by an average of 84% over its last four.
Just in its latest release, OneSpaWorld penciled in a 115% bottom line beat paired with a 21% revenue surprise. Below is a chart illustrating the company’s revenue on a quarterly basis.
Select Energy Services Inc.
Select Energy Services provides water solutions to the U.S. unconventional oil and gas industry. Presently, WTTR carries a Zacks Rank #2 (Buy).
Like the companies above, WTTR’s top and bottom lines look to expand significantly; estimates suggest a Y/Y earnings increase of 230% in its current fiscal year and 90% in FY23.
Looking at the top line, forecasts call for Y/Y revenue upticks of 82% and 26% in FY22 and FY23, respectively.
The stock also pays a solid dividend, currently yielding 2.4% annually.
Bottom Line
Small-caps can get a bad rep due to their spooky price swings. Still, the negative sentiment feels overdone, as many of these stocks turn out to be long-term winners.
In addition, many small-caps carry less analyst coverage, giving investors a head start before others catch on.
All three small-caps above – Select Energy Services Inc. (WTTR - Free Report) , OneSpaWorld Holdings Ltd. (OSW - Free Report) , and Teekay Tankers Ltd. (TNK - Free Report) – boast strong Zacks Ranks and have outperformed the general market over the last year, indicating positive momentum.
And, of course, all three are forecasted to witness significant earnings and revenue growth.
Free Report Reveals How You Could Profit from the Growing Electric Vehicle Industry
Globally, electric car sales continue their remarkable growth even after breaking records in 2021. High gas prices have fueled his demand, but so has evolving EV comfort, features and technology. So, the fervor for EVs will be around long after gas prices normalize. Not only are manufacturers seeing record-high profits, but producers of EV-related technology are raking in the dough as well. Do you know how to cash in? If not, we have the perfect report for you – and it’s FREE! Today, don't miss your chance to download Zacks' top 5 stocks for the electric vehicle revolution at no cost and with no obligation.
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