In this piece, we will take a look at the 15 small company stocks you should own now. For more stocks, head on over to 5 Small Company Stocks You Should Own Now.
The business world these days is defined by the term innovation. As more and more companies offer their products and services while competing with big firms, competition grows and many find it hard to compete. At the heart of survival is innovation, since companies that improve and deliver value to customers end up gaining market share while those that are complacent go out of business.
While generally innovation is thought to be the domain of larger firms, typically, it’s companies that are at the edge of an industry that ends up creating value. One of the strongest examples of the effect that small companies can have on the broader market and how that ends up affecting the share price is that of Netflix, Inc. (NASDAQ:NFLX), which was the first company to realize the value of the Internet to deliver content straight to a user’s home. Netflix transitioned to a digital streaming company in 2007, when its shares were trading in penny stock territory. It gradually expanded to increase its catalog and develop its own content as well. Between 2007 and the onset of the coronavirus pandemic, Netflix, Inc. (NASDAQ:NFLX)’s share price grew by a massive 14,300% but that would only be the beginning. As the pandemic struck, and people were forced indoors, the share price proceeded to almost double and almost touched $700 per share.
At the same time, small companies that have solid fundamentals and trade on the stock market come with the added advantage of easy investing. They have low share prices, which make for an attractive entry point and provide the benefit of massive gains should the investing gods be in one’s favor. For instance, while larger companies such as Apple rarely see their share prices appreciate by 50% in one year, micro cap stocks can often beat this return and yield massive returns for the savvy and careful investor. As an example, while the S&P 500’s annualized returns between 1996 and 2022 sit at 9%, those for the MSCI USA Micro Cap Index sit at 9.5% over the past ten years.
More importantly, and particularly for these days when the drumbeat of a recession is in full swing, small cap stocks are shown to leave investors better off in the aftermath of a recession. For instance, research from JennisonDryden shows that one year after a recession has ended, small cap stocks post almost double the returns of their large cap partners at 34%. This of course comes with the caveat that during a recession, small cap stocks are the first ones that get hit. Not convinced? Well, you might have heard that the current economic crisis is similar to the one faced by America in the 1970s when interest rates soared to an unbelievable 14%. Guess which asset class led the return ladder during this period? According to CC&L Financial Group, it was none other than small caps that had led the market for five years starting from 1975 to 1979, going on to post as high as 53% returns and never dropping below 23%.
Today, we will take a look at some hot small company stocks, with the top picks being BigBear.ai Holdings, Inc. (NYSE:BBAI), Offerpad Solutions Inc. (NYSE:OPAD), and ECARX Holdings Inc. (NASDAQ:ECX).
Photo by Campaign Creators on Unsplash
Our Methodology
In order to compile our list, we first compiled firms that have a market capitalization of less than $300 million. Then, we consulted Insider Monkey’s database of 943 hedge funds that lists their investments for the fourth quarter of last year. From this, the top fifteen companies with the highest hedge fund shareholders were selected.
15 Small Company Stocks You Should Own
15. Sarcos Technology and Robotics Corporation (NASDAQ:STRC)
Number of Hedge Fund Holders in Q4 2022: 13
Sarcos Technology and Robotics Corporation (NASDAQ:STRC) is an American robotics company that is headquartered in Salt Lake City, Utah. The firm makes and sells different kinds of robots with various functions such as performing security, lifting heavy workloads, military use exoskeletons, robotic arms, and robots for subsea use.
Sarcos Technology and Robotics Corporation (NASDAQ:STRC) is operating in a lucrative market that is estimated to grow at a stunning 38.6% CAGR between 2023 and 2028 and be worth $3.7 billion by the end of the forecast period. The firm was awarded a $1 million contract by the U.S. Army in December 2022 for its ammunition handling robots. As of Q4 2022, 13 of the 943 hedge funds part of Insider Monkey’s survey had held a stake in the firm.
Along with Offerpad Solutions Inc. (NYSE:OPAD), BigBear.ai Holdings, Inc. (NYSE:BBAI), and ECARX Holdings Inc. (NASDAQ:ECX), Sarcos Technology and Robotics Corporation (NASDAQ:STRC) is a small company popular with hedge funds.
14. Semantix, Inc. (NASDAQ:STIX)
Number of Hedge Fund Holders in Q4 2022: 14
Semantix, Inc. (NASDAQ:STIX) is a data platform provider that enables companies to manage their operations. Its platform enables users to run big data analytics, visualize their information, and run both machine learning and artificial intelligence. The firm has operations in more than a dozen countries and is headquartered in Sau Paulo, Brazil.
Semantix, Inc. (NASDAQ:STIX) expanded services in January 2023, as it acquired a U.S. firm that offers machine learning services to businesses. Insider Monkey took a look at 943 hedge fund portfolios for last year’s fourth quarter to discover that 14 had invested in the company.
13. Nogin, Inc. (NASDAQ:NOGN)
Number of Hedge Fund Holders in Q4 2022: 14
Nogin, Inc. (NASDAQ:NOGN) is a commerce as a service (CaaS) company headquartered in Tustin, California. The firm provides electronic commerce applications and customers with the option to integrate their in house technologies with its own platform. It provides end to end e commerce services ranging from strategy to performance management and advertising.
Nogin, Inc. (NASDAQ:NOGN) entered into a partnership with a women’s fashion company in February 2023 through which the firm will enable it to create its own e-commerce brand. By the end of 2022’s December quarter, 14 of the 943 hedge funds part of Insider Monkey’s research had held a stake in the firm.
12. View, Inc. (NASDAQ:VIEW)
Number of Hedge Fund Holders in Q4 2022: 14
View, Inc. (NASDAQ:VIEW) is a novel glass manufacturing company headquartered in Milpitas, California. It makes and sells smart glass covered with electrochromic coating and built with wires that enable users to change the glass’ tint to allow natural light inside a room while keeping harmful radiations out.
View, Inc. (NASDAQ:VIEW) scored a win in February 2023 when it announced that its building glass has received a certification for improving air quality. Insider Monkey’s Q4 2022 survey of 943 hedge funds revealed that 14 had bought the company’s shares.
View, Inc. (NASDAQ:VIEW)’s largest investor in our database is Israel Englander’s Millennium Management which owns 615,063 shares that are worth $593,000.
11. Wejo Group Limited (NASDAQ:WEJO)
Number of Hedge Fund Holders in Q4 2022: 14
Wejo Group Limited (NASDAQ:WEJO) is a British software company headquartered in Manchester. The firm provides a cloud platform that enables firms to visualize their data, and share connected vehicle data along with other functions. Some of its customers are in the fleet management, advertising, and retailing industries.
Wejo Group Limited (NASDAQ:WEJO) announced a major contract in February 2023, when it revealed that it has expanded its partnership with Renault to secure direct access to vehicle data for fleet management. 14 of the 943 hedge funds polled by Insider Monkey for their December 2022 investments had bought the firm’s shares.
Ben Levine, Andrew Manuel, and Stefan Renold’s LMR Partners is Wejo Group Limited (NASDAQ:WEJO)’s largest investor. It owns 2.6 million shares that are worth $1.2 million.
10. Faraday Future Intelligent Electric Inc. (NASDAQ:FFIE)
Number of Hedge Fund Holders in Q4 2022: 14
Faraday Future Intelligent Electric Inc. (NASDAQ:FFIE) is a U.S. based electrical vehicle designer that is headquartered in Los Angeles. The firm has five different electric vehicles that it has designed and aims to mass produce to sell in the U.S. and China.
Faraday Future Intelligent Electric Inc. (NASDAQ:FFIE) made a big announcement in February 2023 when it announced that it will begin the production of its luxury FF 91 sedan in March. The vehicle will have a price tag ranging around $200,000 and the firm’s shares soared in the premarket after the announcement. By the end of last year’s fourth quarter, 14 of the 943 hedge funds polled by Insider Monkey had owned a stake in the firm.
Faraday Future Intelligent Electric Inc. (NASDAQ:FFIE)’s largest investor is Jim Simons’ Renaissance Technologies which owns 3.6 million shares that are worth $1 million.
9. Cipher Mining Inc. (NASDAQ:CIFR)
Number of Hedge Fund Holders in Q4 2022: 15
Cipher Mining Inc. (NASDAQ:CIFR) is a cryptocurrency firm that focuses on mining bitcoin. The firm is based in New York, New York.
After bitcoin prices were pummeled by a changing macroeconomic outlook last year, Cipher Mining Inc. (NASDAQ:CIFR)’s shares soared by 24% in January 2023 as it announced that it has increased its mining capacity by 84%. As of last year’s December quarter, 15 of the 943 hedge funds surveyed by Insider Monkey had bought the company’s shares.
8. Rigetti Computing, Inc. (NASDAQ:RGTI)
Number of Hedge Fund Holders in Q4 2022: 15
Rigetti Computing, Inc. (NASDAQ:RGTI) is an American firm that is headquartered in Berkeley, California. The firm is one of the few in the world that is focused on the quantum computing industry. It has its own quantum chip fabrication facility and provides developers with a cloud computing platform.
Rigetti Computing, Inc. (NASDAQ:RGTI) is another technology company that is facing inflationary pressures as the firm announced in February 2023 that it will reduce its workforce by 28%. Insider Monkey dug through 943 hedge fund holdings for last year’s fourth quarter to find out that 15 had invested in the firm.
Out of these, Ben Levine, Andrew Manuel, and Stefan Renold’s LMR Partners is Rigetti Computing, Inc. (NASDAQ:RGTI)’s largest shareholder with a $1 million stake that comes via 1.3 million shares.
7. Embark Technology, Inc. (NASDAQ:EMBK)
Number of Hedge Fund Holders in Q4 2022: 15
Embark Technology, Inc. (NASDAQ:EMBK) is a software company headquartered in San Francisco, California. The firm focuses its efforts on developing self driving software for truck fleets to improve their fuel efficiency and revenue growth.
Embark Technology, Inc. (NASDAQ:EMBK) has a diverse SaaS ecosystem that allows it to enable customers to autonomously manage their fleet, use sensors for automated driving, and use a single software for different platforms. As of last year’s fourth quarter, 15 of the 943 hedge funds surveyed by Insider Monkey had bought a stake in the company.
Embark Technology, Inc. (NASDAQ:EMBK)’s largest hedge fund investor in our database is Mubadala Investment’s MIC Capital Partners which owns 394,400 shares that are worth $1.2 million.
6. Allego N.V. (NYSE:ALLG)
Number of Hedge Fund Holders in Q4 2022: 16
Allego N.V. (NYSE:ALLG) is a Dutch company that provides electric vehicle chargers. It has thousands of ports all over Europe and is headquartered in Arnhem, the Netherlands.
Allego N.V. (NYSE:ALLG) teamed up with the French infrastructure management firm Vinci Autoroutes to open four new fast charging parks on different motorways. 16 of the 943 hedge funds part of Insider Monkey’s fourth quarter of 2022 study had bought the firm’s shares.
BigBear.ai Holdings, Inc. (NYSE:BBAI), Offerpad Solutions Inc. (NYSE:OPAD), Allego N.V. (NYSE:ALLG), and ECARX Holdings Inc. (NASDAQ:ECX) are some great small company stocks.
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Disclosure: None. 15 Small Company Stocks You Should Own is originally published on Insider Monkey.