Small cap stocks are looking very attractive right now. Year-to-date the Russell 2000 small cap index is up over 8%. This is versus the S&P 500 which is up only 1.48%. “I just think there’s a general sentiment that is really strong, and it’s hard to turn the sentiment around, especially if we get a good Q2 reporting season which we’re looking for,” Jefferies analyst Steven DeSanctis said recently. Plus small cap stocks tend to be more insulated from international tensions due to their largely domestic focus. “People want to own small cap because of trade wars” DeSanctis added.
So with this bullish analysis in mind, we turned to TipRanks powerful stock screener to source the 10 best small cap ideas out there. We specifically searched for Small Cap stocks with a ‘Strong Buy’ rating from top analysts, and big upside potential to boot. The screener has now been revamped to include price targets- enabling you to pinpoint stocks set to surge. Let’s take a closer look at the second set of stocks now. For the first five click here.
1. Aimmune Therapeutics (NASDAQ:AIMT)
This revolutionary biotech is dealing with the notoriously tricky issue of food allergies. “We believe lead drug candidate AR101 is well positioned to become the first FDA-approved treatment for reducing allergic reaction to peanut protein” states Cantor Fitzgerald’s William Tanner (Profile & Recommendations). His $64 price target indicates massive upside potential of 138%.
And the company plans to tackle more than just peanuts. Tanner continues “We believe the company’s CODIT technology could be useful for developing other food allergy treatments and we note that AIMT plans to file an IND for egg allergy by YE18 and initiate clinical testing in walnut allergy in 2019.” We can see that the stock has 100% Street support right now:
2. R1 RCM Inc (NASDAQ:RCM)
R1 RCM is a leading provider of tech-enabled financial services to healthcare providers. Crucially, the company plays a unique role in the massive Revenue Cycle Management (RCM) market. This is a process that uses medical billing software to track patient care from registration to the final payment.
Five-star Cantor Fitzgerald analyst Steven Halper (Profile & Recommendations) estimates the RCM market opportunity will increase to almost $70 billion by 2020. Meanwhile “increasing consolidation in the healthcare market is likely to drive growth in outsourcing to $7.7 billion by 2020.” He has a $10 price target on RCM (15% upside potential).
Three analysts have published Buy ratings on the stock in the last three months, with an average price target of $11 (27% upside potential). View RCM Price Target & Analyst Ratings Details.
3. Imperva (NYSE:IMPV)
IT security stock IMPV is poised to outperform in 2H18. Indeed Evercore ISI analyst Kenneth Talanian (Profile & Recommendations) singles out Imperva as his favorite bounce-back idea for 2H18. He encourages investors to revisit the stock. This is because “whether on EV/Sales or EV/FCF/Growth, IMPV has lagged the group and should offer upside in 2H18.”
Most importantly, he notes that Imperva has a very strong positioning in application and database security. It is the market leader in WAF, which continues to be an important area of security as more companies use public-facing web applications and DDoS attacks continue to become easier (e.g. DDoS-as-a-Service). Talanian has a $56 price target (16% upside potential) on the stock, but the Street is even more bullish:
4. Conn’s (NASDAQ:CONN)
Texas-based Conn’s is a furniture, mattress, electronics and appliance chain store. “For the past several quarters, we have recommended CONN as one of the most compelling, albeit speculative, smaller-cap names in Hardlines, on prospects for a meaningful turnaround at the chain under the leadership of new management” states five-star Oppenheimer analyst Brian Nagel (Profile & Recommendations).
Encouragingly, he already sees signs that these changes are taking place: “the Q1:18 results and updated guidance represent the key data points we were awaiting and a significant step forward.” He has a $40 price target on CONN which is currently trading at just $33. Three analysts have published recent buy ratings on CONN with a $42 average price target (27% upside potential). View CONN Price Target & Analyst Ratings Details.
5. TherapeuticsMD (NYSE:TXMD)
TXMD is a unique, innovative healthcare company focused on female healthcare. It is on the cusp of big things with its newly-approved drug Imvexxy. This is a treatment for moderate-to-severe pain due to menopause. However, the current share price doesn’t reflect this.
Oppenheimer’s Jay Olson (Profile & Recommendations) is very impressed by TXMD’s “compelling launch plan.” He recently reiterated his buy rating and $12 price target- indicating 92% upside potential. “Imvexxy should now become the first-line treatment of choice for most cases of dyspareunia. We believe TXMD has the capabilities in place to bring this vision into reality” writes Olson. He is predicting a speedy uptake given high dissatisfaction levels with current options.
Now it’s your turn. Find stellar stock ideas backed by the Street’s top analyst.
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