10 Best Small-Cap Stocks to Buy Before They Explode

6. PACS Group, Inc. (NYSE:PACS)

Market Capitalization: $1.755 Billion

Analyst Upside Potential: 101.17%

Number of Hedge Fund Holders: 31

PACS Group, Inc. (NYSE:PACS) is a holding company specializing in investments within the post-acute healthcare sector. It operates a portfolio of independently managed facilities that provide skilled nursing care and other post-acute services. The company oversees approximately 314 post-acute care and senior living facilities across 17 states, serving over 30,000 patients daily.

The company is currently navigating significant challenges due to allegations of Medicare fraud and deceptive billing practices. These claims, originating from a Hindenburg Research report, accuse the company of exploiting Medicare waivers during the COVID-19 pandemic to inflate revenues and create the appearance of growth before its 2024 IPO. CEO Jason Murray has emphasized the company’s commitment to compliance and transparency. PACS Group, Inc. (NYSE:PACS) Audit Committee, with external counsel, is investigating these allegations while cooperating with federal authorities.

Despite these issues, the company highlighted its operational strengths, including high occupancy rates of 90.5% against an industry average of 77% with strong CMS ratings for many facilities. The company also has significant liquidity exceeding $600 million as of Q3 2024. It is one of the best small cap stocks to buy before they explode as analysts expect more than a 101% upside in the next 12 months.

Wasatch Small Cap Growth Strategy stated the following regarding PACS Group, Inc. (NYSE:PACS) in its Q4 2024 investor letter:

“PACS Group, Inc. (NYSE:PACS) was another large detractor. The company’s subsidiaries deliver post-acute health care, assisted living and skilled nursing care services. PACS Group postponed releasing quarterly results after it received civil investigative demands from the federal government regarding the company’s reimbursement and referral practices. Given questions about the business, we decided to move on from the stock and sold our position.”