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Best Small-Cap Stocks to Buy Now for January 2026

Kevin Voigt Updated on January 30, 2026

BWMXFETKSSIRWDAPEI

Small-cap stocks can add torque to a diversified portfolio — if you can stomach bumps along the way. They’ve lagged for much of the past cycle and trade at a notable discount to large caps, offering upside potential as earnings inflect and economic conditions evolve.

These companies, typically $300 million to $2 billion in market value, aren’t household names, but often have more runway to capture share, expand margin, and surprise on earnings.

The trade-off is real. Smaller companies typically face greater volatility, thinner liquidity and less financial flexibility, leaving them more sensitive to macro headwinds. Careful selection matters, emphasizing durable business models, improving fundamentals and credible capital discipline.

Historically, periods of stabilizing inflation and easing financial conditions have aided small caps by lowering financing costs and boosting risk appetite. We target companies showing positive estimate revisions and healthy Style Scores — signs that earnings outlook and sentiment are turning. Here are our top small-cap picks:

5 Best Small-Cap Stocks to Buy Today

Company (Ticker)	12 Week Price Change	Forward PE	Price	Proj EPS Growth (1 Year)	Projected Sales Growth (1Y)
Betterware de Mexico SAPI de C (BWMX)	29.86%	7.32	$18.08	44.44%	39.18%
Forum Energy Technologies (FET)	56.89%	27.58	$45.52	197.27%	2.75%
Kohl's (KSS)	0.90%	12.10	$17.57	-6.89%	-3.96%
Ironwood Pharmaceuticals (IRWD)	137.07%	6.39	$4.98	375.00%	22.66%
American Public Education (APEI)	37.82%	18.97	$42.25	106.71%	7.11%

*Updated on January 30, 2026.

Betterware de Mexico SAPI de C (BWMX)

$18.08 USD -0.01 (-0.06%)

3-Year Stock Price Performance

Premium Research for BWMX

Zacks Rank This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below. Zacks Rank Definition Annualized Return 1 Strong Buy 23.83% 2 Buy 18.13% 3 Hold 10.08% 4 Sell 5.56% 5 Strong Sell 2.77% S&P 500 11.44% Zacks Rank Education - Learn about the Zacks Rank Zacks Rank Home - Zacks Rank resources in one place Zacks Premium - The only way to fully access the Zacks Rank: Strong Buy 1

Zacks Rank	Definition	Annualized Return
1	Strong Buy	23.83%
2	Buy	18.13%
3	Hold	10.08%
4	Sell	5.56%
5	Strong Sell	2.77%
S&P	500	11.44%

Zacks Industry Rank The Zacks Industry Rank assigns a rating to each of the 265 X (Expanded) Industries based on their average Zacks Rank. An industry with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's. The industry with the best average Zacks Rank would be considered the top industry (1 out of 265), which would place it in the top 1% of Zacks Ranked Industries. The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%. Zacks Rank Education -- Learn more about the Zacks Rank Zacks Industry Rank Education -- Learn more about the Zacks Industry Rank: Bottom 37% (154 out of 244)

Zacks Sector Rank The Zacks Sector Rank assigns a rating to each of the 16 Sectors based on their average Zacks Rank. A sector with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's. Zacks Sector Rank Education - Learn more about the Zacks Sector Rank The sector with the best average Zacks Rank would be considered the top sector (1 out of 16), which would place it in the top 1% of Zacks Ranked Sectors. The sector with the worst average Zacks Rank (16 out of 16) would place in the bottom 1%. Zacks Rank Education -- Learn more about the Zacks Rank Zacks Sector Rank Education -- Learn more about the Zacks Sector Rank: Bottom 19% (13 out of 16)

Style Scores

The Style Scores are a complementary set of indicators to use alongside the Zacks Rank. It allows the user to better focus on the stocks that are the best fit for his or her personal trading style.

The scores are based on the trading styles of Value, Growth, and Momentum. There's also a VGM Score ('V' for Value, 'G' for Growth and 'M' for Momentum), which combines the weighted average of the individual style scores into one score.

Value Score A

Growth Score A

Momentum Score A

VGM Score A

Within each Score, stocks are graded into five groups: A, B, C, D and F. As you might remember from your school days, an A, is better than a B; a B is better than a C; a C is better than a D; and a D is better than an F.

As an investor, you want to buy stocks with the highest probability of success. That means you want to buy stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Score of an A or a B in your personal trading style.

Zacks Style Scores Education - Learn more about the Zacks Style Scores

A Value C Growth A Momentum A VGM

Earnings ESP Zacks Earnings ESP (Expected Surprise Prediction) looks to find companies that have recently seen positive earnings estimate revision activity. The idea is that more recent information is, generally speaking, more accurate and can be a better predictor of the future, which can give investors an advantage in earnings season. The technique has proven to be very useful for finding positive surprises. In fact, when combining a Zacks Rank #3 or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time, while they also saw 28.3% annual returns on average, according to our 10 year backtest. Visit the Earnings ESP Center See the Full List of Stocks To Beat Earnings: 0.00%

Market Cap:$675.06 M
Projected EPS Growth:-4.47%
Last Quarter EPS Growth:0.00%
Last EPS Surprise:2.27%
Next EPS Report date:Feb. 26, 2026

Our Take:

Betterware de México is a direct-to-consumer seller of home organization and beauty products in Mexico, operating under the BeFra umbrella. Its market cap is about $675.1 million. A Zacks Rank #1 (Strong Buy) with Style Scores of A for Value and Momentum and C for Growth reflects favorable revisions and attractive pricing as consumer demand normalizes. It plans to acquire Tupperware’s operating assets in Latin America.

In the latest quarter, management reported year-over-year revenue growth despite soft consumption, highlighting resilient order intake and efficiencies across the combined platform. The broader beauty mix and cost discipline help defend margins while the catalog-to-digital model keeps working capital lean. These are near-term supports as the company cycles past macro volatility.

On the Price, Consensus & EPS Surprise chart, shares have climbed alongside rising 2026–2027 earnings lines, a sign that estimate momentum is catching up with the operating cadence.

Forum Energy Technologies (FET)

$45.52 USD +0.43 (0.95%)

3-Year Stock Price Performance

Premium Research for FET

Zacks Rank This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below. Zacks Rank Definition Annualized Return 1 Strong Buy 23.83% 2 Buy 18.13% 3 Hold 10.08% 4 Sell 5.56% 5 Strong Sell 2.77% S&P 500 11.44% Zacks Rank Education - Learn about the Zacks Rank Zacks Rank Home - Zacks Rank resources in one place Zacks Premium - The only way to fully access the Zacks Rank: Strong Buy 1

Zacks Rank	Definition	Annualized Return
1	Strong Buy	23.83%
2	Buy	18.13%
3	Hold	10.08%
4	Sell	5.56%
5	Strong Sell	2.77%
S&P	500	11.44%

Zacks Industry Rank The Zacks Industry Rank assigns a rating to each of the 265 X (Expanded) Industries based on their average Zacks Rank. An industry with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's. The industry with the best average Zacks Rank would be considered the top industry (1 out of 265), which would place it in the top 1% of Zacks Ranked Industries. The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%. Zacks Rank Education -- Learn more about the Zacks Rank Zacks Industry Rank Education -- Learn more about the Zacks Industry Rank: Bottom 35% (158 out of 244)

Zacks Sector Rank The Zacks Sector Rank assigns a rating to each of the 16 Sectors based on their average Zacks Rank. A sector with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's. Zacks Sector Rank Education - Learn more about the Zacks Sector Rank The sector with the best average Zacks Rank would be considered the top sector (1 out of 16), which would place it in the top 1% of Zacks Ranked Sectors. The sector with the worst average Zacks Rank (16 out of 16) would place in the bottom 1%. Zacks Rank Education -- Learn more about the Zacks Rank Zacks Sector Rank Education -- Learn more about the Zacks Sector Rank: Bottom 6% (15 out of 16)

Style Scores

The Style Scores are a complementary set of indicators to use alongside the Zacks Rank. It allows the user to better focus on the stocks that are the best fit for his or her personal trading style.

The scores are based on the trading styles of Value, Growth, and Momentum. There's also a VGM Score ('V' for Value, 'G' for Growth and 'M' for Momentum), which combines the weighted average of the individual style scores into one score.

Value Score A

Growth Score A

Momentum Score A

VGM Score A

Within each Score, stocks are graded into five groups: A, B, C, D and F. As you might remember from your school days, an A, is better than a B; a B is better than a C; a C is better than a D; and a D is better than an F.

As an investor, you want to buy stocks with the highest probability of success. That means you want to buy stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Score of an A or a B in your personal trading style.

Zacks Style Scores Education - Learn more about the Zacks Style Scores

C Value A Growth D Momentum A VGM

Earnings ESP Zacks Earnings ESP (Expected Surprise Prediction) looks to find companies that have recently seen positive earnings estimate revision activity. The idea is that more recent information is, generally speaking, more accurate and can be a better predictor of the future, which can give investors an advantage in earnings season. The technique has proven to be very useful for finding positive surprises. In fact, when combining a Zacks Rank #3 or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time, while they also saw 28.3% annual returns on average, according to our 10 year backtest. Visit the Earnings ESP Center See the Full List of Stocks To Beat Earnings: 0.00%

Market Cap:$513.03 M
Projected EPS Growth:163.95%
Last Quarter EPS Growth:370.00%
Last EPS Surprise:42.11%
Next EPS Report date:Feb. 20, 2026

Our Take:

Forum Energy supplies equipment and services across drilling, completions, subsea and production. Its market cap is roughly $513 million. A Zacks Rank #1 pairs with an A for Growth, signaling positive revisions tied to execution, while C for Value is mixed and D for Momentum is weaker, producing a still-compelling opportunity.

Third-quarter results showed $196 million in revenue and positive adjusted earnings, aided by cost actions and a more profitable mix; management raised the 2025 free cash flow guidance, pointing to steady aftermarket and international activity even as North American spending remains selective. Balance sheet improvement and asset rationalization are incremental tailwinds for small-cap energy cyclicals.

On the chart, estimates for 2026 turn higher as the price breaks out of a long base, suggesting that improving profitability is feeding into forward EPS and validating the Rank as yield remains attractive.

Kohl's (KSS)

$17.57 USD +0.67 (3.96%)

3-Year Stock Price Performance

Premium Research for KSS

Zacks Rank This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below. Zacks Rank Definition Annualized Return 1 Strong Buy 23.83% 2 Buy 18.13% 3 Hold 10.08% 4 Sell 5.56% 5 Strong Sell 2.77% S&P 500 11.44% Zacks Rank Education - Learn about the Zacks Rank Zacks Rank Home - Zacks Rank resources in one place Zacks Premium - The only way to fully access the Zacks Rank: Strong Buy 1

Zacks Rank	Definition	Annualized Return
1	Strong Buy	23.83%
2	Buy	18.13%
3	Hold	10.08%
4	Sell	5.56%
5	Strong Sell	2.77%
S&P	500	11.44%

Zacks Industry Rank The Zacks Industry Rank assigns a rating to each of the 265 X (Expanded) Industries based on their average Zacks Rank. An industry with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's. The industry with the best average Zacks Rank would be considered the top industry (1 out of 265), which would place it in the top 1% of Zacks Ranked Industries. The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%. Zacks Rank Education -- Learn more about the Zacks Rank Zacks Industry Rank Education -- Learn more about the Zacks Industry Rank: Top 2% (4 out of 244)

Zacks Sector Rank The Zacks Sector Rank assigns a rating to each of the 16 Sectors based on their average Zacks Rank. A sector with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's. Zacks Sector Rank Education - Learn more about the Zacks Sector Rank The sector with the best average Zacks Rank would be considered the top sector (1 out of 16), which would place it in the top 1% of Zacks Ranked Sectors. The sector with the worst average Zacks Rank (16 out of 16) would place in the bottom 1%. Zacks Rank Education -- Learn more about the Zacks Rank Zacks Sector Rank Education -- Learn more about the Zacks Sector Rank: Top 38% (6 out of 16)

Style Scores

The Style Scores are a complementary set of indicators to use alongside the Zacks Rank. It allows the user to better focus on the stocks that are the best fit for his or her personal trading style.

The scores are based on the trading styles of Value, Growth, and Momentum. There's also a VGM Score ('V' for Value, 'G' for Growth and 'M' for Momentum), which combines the weighted average of the individual style scores into one score.

Value Score A

Growth Score A

Momentum Score A

VGM Score A

Within each Score, stocks are graded into five groups: A, B, C, D and F. As you might remember from your school days, an A, is better than a B; a B is better than a C; a C is better than a D; and a D is better than an F.

As an investor, you want to buy stocks with the highest probability of success. That means you want to buy stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Score of an A or a B in your personal trading style.

Zacks Style Scores Education - Learn more about the Zacks Style Scores

A Value F Growth D Momentum C VGM

Earnings ESP Zacks Earnings ESP (Expected Surprise Prediction) looks to find companies that have recently seen positive earnings estimate revision activity. The idea is that more recent information is, generally speaking, more accurate and can be a better predictor of the future, which can give investors an advantage in earnings season. The technique has proven to be very useful for finding positive surprises. In fact, when combining a Zacks Rank #3 or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time, while they also saw 28.3% annual returns on average, according to our 10 year backtest. Visit the Earnings ESP Center See the Full List of Stocks To Beat Earnings: 22.97%

Market Cap:$1.90 B
Projected EPS Growth:-6.67%
Last Quarter EPS Growth:-82.14%
Last EPS Surprise:152.63%
Next EPS Report date:March 10, 2026

Our Take:

Kohl’s is a U.S. department-store chain integrating Sephora shop-in-shops and off-mall convenience. It has a market cap of $1.9 billion. A Zacks Rank #1 with an A for Value offsets a weaker F for Growth and D for Momentum, indicating that estimate revisions and inexpensive multiples are the near-term draw for this turnaround name.

In the last reported quarter, despite a decline in net sales, Kohl’s delivered gross margin expansion, positive adjusted EPS, and raised its full-year outlook as inventory discipline and category mix improved. A newly appointed CEO sharpened the focus on profitability, traffic productivity, and working-capital control, blocking and tackling that can compound as discretionary demand stabilizes.

The chart shows the stock rebounding from lows with a nascent upturn in the next year (2027) consensus, even as near-term lines remain cautious, consistent with a multi-quarter operational reset that supports the current Rank.

Ironwood Pharmaceuticals (IRWD)

$4.98 USD +0.12 (2.47%)

3-Year Stock Price Performance

Premium Research for IRWD

Zacks Rank This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below. Zacks Rank Definition Annualized Return 1 Strong Buy 23.83% 2 Buy 18.13% 3 Hold 10.08% 4 Sell 5.56% 5 Strong Sell 2.77% S&P 500 11.44% Zacks Rank Education - Learn about the Zacks Rank Zacks Rank Home - Zacks Rank resources in one place Zacks Premium - The only way to fully access the Zacks Rank: Strong Buy 1

Zacks Rank	Definition	Annualized Return
1	Strong Buy	23.83%
2	Buy	18.13%
3	Hold	10.08%
4	Sell	5.56%
5	Strong Sell	2.77%
S&P	500	11.44%

Zacks Industry Rank The Zacks Industry Rank assigns a rating to each of the 265 X (Expanded) Industries based on their average Zacks Rank. An industry with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's. The industry with the best average Zacks Rank would be considered the top industry (1 out of 265), which would place it in the top 1% of Zacks Ranked Industries. The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%. Zacks Rank Education -- Learn more about the Zacks Rank Zacks Industry Rank Education -- Learn more about the Zacks Industry Rank: Bottom 39% (149 out of 244)

Zacks Sector Rank The Zacks Sector Rank assigns a rating to each of the 16 Sectors based on their average Zacks Rank. A sector with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's. Zacks Sector Rank Education - Learn more about the Zacks Sector Rank The sector with the best average Zacks Rank would be considered the top sector (1 out of 16), which would place it in the top 1% of Zacks Ranked Sectors. The sector with the worst average Zacks Rank (16 out of 16) would place in the bottom 1%. Zacks Rank Education -- Learn more about the Zacks Rank Zacks Sector Rank Education -- Learn more about the Zacks Sector Rank: Bottom 38% (10 out of 16)

Style Scores

The Style Scores are a complementary set of indicators to use alongside the Zacks Rank. It allows the user to better focus on the stocks that are the best fit for his or her personal trading style.

The scores are based on the trading styles of Value, Growth, and Momentum. There's also a VGM Score ('V' for Value, 'G' for Growth and 'M' for Momentum), which combines the weighted average of the individual style scores into one score.

Value Score A

Growth Score A

Momentum Score A

VGM Score A

Within each Score, stocks are graded into five groups: A, B, C, D and F. As you might remember from your school days, an A, is better than a B; a B is better than a C; a C is better than a D; and a D is better than an F.

As an investor, you want to buy stocks with the highest probability of success. That means you want to buy stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Score of an A or a B in your personal trading style.

Zacks Style Scores Education - Learn more about the Zacks Style Scores

A Value B Growth A Momentum A VGM

Earnings ESP Zacks Earnings ESP (Expected Surprise Prediction) looks to find companies that have recently seen positive earnings estimate revision activity. The idea is that more recent information is, generally speaking, more accurate and can be a better predictor of the future, which can give investors an advantage in earnings season. The technique has proven to be very useful for finding positive surprises. In fact, when combining a Zacks Rank #3 or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time, while they also saw 28.3% annual returns on average, according to our 10 year backtest. Visit the Earnings ESP Center See the Full List of Stocks To Beat Earnings: 0.00%

Market Cap:$790.62 M
Projected EPS Growth:300.00%
Last Quarter EPS Growth:71.43%
Last EPS Surprise:166.67%
Next EPS Report date:Feb. 26, 2026

Our Take:

Ironwood is a GI-focused biotech best known for LINZESS, co-promoted with AbbVie. Its market cap is roughly $791 million. A Zacks Rank #1 with Style Scores of A for Value and Momentum and B for Growth reflects upward estimate revisions, stronger price action, and a still-reasonable valuation for a cash-generating specialty-pharma profile.

In the latest quarter, management reported double-digit prescription demand and improved net pricing for LINZESS, raising full-year guidance, evidence that rebate dynamics and steady volume can offset R&D volatility. The brand’s durability, coupled with disciplined expense control, keeps it on firmer footing while strategic options remain in focus.

On the chart, a sharp price recovery aligns with higher 2026–2027 consensus lines, indicating that better net sales visibility is translating into forward EPS. The FDA’s approval for the expanded use of LINZESS in pediatric patients is further aiding its sales.

American Public Education (APEI)

$42.25 USD -0.02 (-0.05%)

3-Year Stock Price Performance

Premium Research for APEI

Zacks Rank This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below. Zacks Rank Definition Annualized Return 1 Strong Buy 23.83% 2 Buy 18.13% 3 Hold 10.08% 4 Sell 5.56% 5 Strong Sell 2.77% S&P 500 11.44% Zacks Rank Education - Learn about the Zacks Rank Zacks Rank Home - Zacks Rank resources in one place Zacks Premium - The only way to fully access the Zacks Rank: Strong Buy 1

Zacks Rank	Definition	Annualized Return
1	Strong Buy	23.83%
2	Buy	18.13%
3	Hold	10.08%
4	Sell	5.56%
5	Strong Sell	2.77%
S&P	500	11.44%

Zacks Industry Rank The Zacks Industry Rank assigns a rating to each of the 265 X (Expanded) Industries based on their average Zacks Rank. An industry with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's. The industry with the best average Zacks Rank would be considered the top industry (1 out of 265), which would place it in the top 1% of Zacks Ranked Industries. The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%. Zacks Rank Education -- Learn more about the Zacks Rank Zacks Industry Rank Education -- Learn more about the Zacks Industry Rank: Bottom 33% (164 out of 244)

Zacks Sector Rank The Zacks Sector Rank assigns a rating to each of the 16 Sectors based on their average Zacks Rank. A sector with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's. Zacks Sector Rank Education - Learn more about the Zacks Sector Rank The sector with the best average Zacks Rank would be considered the top sector (1 out of 16), which would place it in the top 1% of Zacks Ranked Sectors. The sector with the worst average Zacks Rank (16 out of 16) would place in the bottom 1%. Zacks Rank Education -- Learn more about the Zacks Rank Zacks Sector Rank Education -- Learn more about the Zacks Sector Rank: Bottom 19% (13 out of 16)

Style Scores

The Style Scores are a complementary set of indicators to use alongside the Zacks Rank. It allows the user to better focus on the stocks that are the best fit for his or her personal trading style.

The scores are based on the trading styles of Value, Growth, and Momentum. There's also a VGM Score ('V' for Value, 'G' for Growth and 'M' for Momentum), which combines the weighted average of the individual style scores into one score.

Value Score A

Growth Score A

Momentum Score A

VGM Score A

Within each Score, stocks are graded into five groups: A, B, C, D and F. As you might remember from your school days, an A, is better than a B; a B is better than a C; a C is better than a D; and a D is better than an F.

As an investor, you want to buy stocks with the highest probability of success. That means you want to buy stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Score of an A or a B in your personal trading style.

Zacks Style Scores Education - Learn more about the Zacks Style Scores

B Value A Growth F Momentum A VGM

Earnings ESP Zacks Earnings ESP (Expected Surprise Prediction) looks to find companies that have recently seen positive earnings estimate revision activity. The idea is that more recent information is, generally speaking, more accurate and can be a better predictor of the future, which can give investors an advantage in earnings season. The technique has proven to be very useful for finding positive surprises. In fact, when combining a Zacks Rank #3 or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time, while they also saw 28.3% annual returns on average, according to our 10 year backtest. Visit the Earnings ESP Center See the Full List of Stocks To Beat Earnings: 3.45%

Market Cap:$764.45 M
Projected EPS Growth:96.36%
Last Quarter EPS Growth:1,600.00%
Last EPS Surprise:433.33%
Next EPS Report date:March 5, 2026

Our Take:

American Public Education provides online and campus-based higher-ed and workforce programs, including AMU and APU, Rasmussen University and Hondros College of Nursing. Its market cap is about $764.5 million. With a Zacks Rank #1, Style Scores of B for Value, A for Growth and F for Momentum point to positive revisions and operating traction even as the stock’s near-term technicals lag.

In the last reported quarter, APEI exceeded guidance with strong revenue, net income, EPS and adjusted EBITDA, supported by improving enrollment and execution in nursing programs. Management’s full-year outlook underscored momentum in core segments, improving quality of the student mix and ongoing efficiency initiatives that can expand margins well into 2026.

On the chart, a base-building phase gives way to a turn higher as 2026–2027 consensus lines edge up, suggesting the estimate trend is beginning to validate operational progress.

Methodology

The Zacks Rank is a proprietary stock-rating model that uses trends in earnings estimate revisions and earnings-per-share (EPS) surprises to classify stocks into five groups: #1 (Strong Buy), #2 (Buy), #3 (Hold), #4 (Sell) and #5 (Strong Sell). The Zacks Rank is calculated through four primary factors related to earnings estimates: analysts' consensus on earnings estimate revisions, the magnitude of revision change, the upside potential and estimate surprise (or the degree in which earnings per share deviated from the previous quarter).

Zacks builds the data from 3,000 analysts at over 150 different brokerage firms. The average yearly gain for Zacks Rank #1 (Strong Buy) stocks is +23.62% per year from January, 1988, through June 2, 2025.

For this list, only companies trading 100,000 shares or more daily and in the top 50% of industries were considered. All stocks had a Zacks Rank #1 rank at the time of selection. All information is current as of market open, Jan. 30, 2026.

Guide to Best Small-Cap Stocks

What Are Small-Cap Stocks?

“Small-cap” refers to publicly traded companies whose market capitalisation falls below a certain threshold. The exact cutoff varies by region or index provider, but commonly in the U.S. small-caps are defined as roughly $300 million to $2 billion in market cap.

Why Invest in Small-Cap Stocks

Growth potential: Because these companies are smaller, they have more runway to grow revenues, profits and market share.
Diversification: They often behave differently than large-cap stocks, so including them can enhance portfolio diversification.
Value opportunity: Many small-caps are currently trading at valuations below historical norms or relative to large caps — offering potential mispricing opportunities.

Small-Cap vs Mid-Cap vs Large-Cap Stocks

Small Cap:

Market capitalization of between $300 million to $2 billion (but designation can vary among indices).
Higher growth potential, but higher risk and less liquidity.
More volatile and more sensitive to economic and interest rate shifts.

Medium (Mid) Cap:

Market capitalization generally from $2 billion to $10 billion.
Balanced between growth and stability.
Fewer extremes than small caps, but possibly less upside.

Large Cap:

Market cap is usually over $10 billion.
Established companies, lower growth but more stability.

Benefits of Investing in Small-Cap Stocks

Potential for outsized returns if a small company scales successfully.
Greater market inefficiencies — less analyst coverage means more opportunity for undervalued gems.
Cyclical upside — when conditions improve (such as lower rates or economic recovery) small caps often lead the trend.

Risks and Challenges of Small-Cap Stocks

Higher volatility — More price swings, less predictable earnings.
Sensitivity to economic and interest rate cycles — Small cap companies often carry more floating rate debt, shorter maturities, and weaker financials. Small cap stocks are generally “more vulnerable” in elevated-interest rate environments.
Less liquidity and coverage — Small cap stocks may be harder to trade, with fewer analysts covering them and less public information
Greater capital risk — Many small-cap firms are still unprofitable; their future may be less certain.

Small-Cap ETFs vs Small-Cap Stocks

ETFs: Small-cap exchange traded funds provide instant diversification, lower company-specific risk, simpler to invest.
Individual stocks: Offer higher potential upside (and higher risk). You can benefit from picking a breakout company, but the odds of mis-steps are higher.
If you believe in the asset class broadly, a small-cap ETF may be a smarter choice; if you want to hand-pick potential winners and accept higher risk, then individual stocks might appeal.

How to Choose the Best Small-Cap Stocks

Look at factors like:

Business quality: Profitability (or path to profitability), return on invested capital, competitive advantage (often known as a ‘moat”).
Financial strength: Manageable debt, good cash flow and reasonable valuation.
Valuation: Since small caps are currently trading at depressed valuations relative to large caps, finding ones that are both good quality and cheap may give you an edge.
Sector and cycle fit: Because many small-caps are more cyclical, consider how economic or rate trends might affect them.
Liquidity and transparency: Ensure the company has sufficient trading volume and good public disclosure.

Time horizon: Small-cap investing often requires patience — these stocks may take time to execute and get recognised by the market.

How to Invest in Small-Cap Stocks

Decide your allocation: How much of your portfolio are you willing to place into higher-risk small caps?
Combined approach: Consider holding a small-cap ETF and a few hand-picked individual names for upside.
Use dollar-cost averaging to smooth entry over time (given the greater volatility of small cap stocks.)
Monitor macroeconomic variables: Interest rates, economic growth, inflation, liquidity — these matter for small caps.
Stay disciplined: Set stop-losses or position limits; avoid over-allocating to speculative names
Review your time horizon: Small caps typically work better when held for multiple years rather than trading in and out.

Tips for Building a Small-Cap Portfolio

Diversify across sectors to avoid concentration risk (such as spreading across small-cap healthcare, industrial, consumer stocks and so forth).
Blend quality and speculative: Have some “core” small-cap holdings with proven businesses plus some high-upside speculative names.
Watch weighting: Don’t let any one small-cap issue become too big a part of your portfolio.
Track valuations: Since small-cap valuations can re-rate, be ready to adjust when valuations seem stretched.
Stay updated on macro shifts: For example, rate cuts can help small-caps more than large caps. Medium term, that dynamic could drive performance.

Frequently Asked Questions About Small-Cap Stocks

How long should I hold small-cap stocks?

Because of their risk and growth nature,a time horizon of 3-5 years or more is generally preferable. Short-term trading can be risky due to volatility and structural shifts.

Are small-cap stocks suitable for beginners?

They can be, but only if the investor understands the risks, is comfortable with volatility and uses appropriate position sizing. Beginners might start with ETFs or limit exposure rather than going heavy into speculative names.

What sectors do the best small-cap stocks usually come from?

Historically: industrials, consumer discretionary, healthcare/biotech, technology. Small caps tend to have more cyclical exposure compared to large caps.
Also note many small-caps fly under the radar.

Can small-cap stocks be dividend-paying?

Yes — though less commonly than large-caps. Many small-cap companies reinvest profits into growth rather than returning dividends. But some mature small-caps may pay dividends.

What is the historical performance of small-cap stocks?

Historically small-caps offered a “small-cap premium” over large-caps due to greater growth potential.
However, more recently this premium has eroded — for example, J.P. Morgan reports that the small-cap growth engine has diminished in recent years.
Still, some data suggests that when macro conditions shift (such as interest rate cuts and economic recovery), small caps tend to outperform large caps.