Earlier on February 24, Robert Teeter of Silvercrest Asset Management shared his perspective on small-cap stocks and highlighted their link to economic conditions and sensitivity to financing activity. He noted that the Trump trade initially boosted small caps due to expectations of economic acceleration and lower interest rates, both of which are favorable for these companies. However, policy uncertainty and weaker-than-expected economic data have delayed their rally. Teeter believes that small caps will come into their own later in the year, but for now, they are facing a choppy market with significant rotation.
In advising clients, Teeter emphasized the importance of diversification within the S&P 500. He pointed out that the equal-weight benchmark has been performing well this year, and within the tech sector, the average tech stock is outperforming the tech sector as a whole. This suggests that investors are seeking diversification to protect themselves against policy risks. Teeter also highlighted healthcare as an interesting sector and noted that it has faced challenges with profit margins following the pandemic but now seems to have stabilized. He also discussed international markets and observed that they had outperformed US markets at the start of the year. He sees opportunities in these markets due to good valuations and the stabilization of the dollar, which reduces dollar strength and benefits non-US sectors.
Given Teetar’s sentiment, small-cap value stocks might be a good option right now due to their historically strong long-term performance and current undervaluation relative to large-cap stocks. According to Teeter, small caps are expected to recover later this year. Therefore, we’re here with a list of the 10 best small-cap value stocks to buy now.
Phone with stocks chart
Methodology
We first used the Finviz stock screener to compile a list of small-cap value stocks that were trading between $300 million and $2 billion. We then picked 10 stocks with a forward P/E ratio under 15, that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024.
Note: All data was recorded on March 19.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Best Small-Cap Value Stocks to Buy Now
10. Berkshire Hills Bancorp Inc. (NYSE:BHLB)
Forward P/E Ratio as of March 19: 10.88
Market Capitalization as of March 19: $1.22 billion
Number of Hedge Fund Holders: 28
Berkshire Hills Bancorp Inc. (NYSE:BHLB) is the bank holding company for Berkshire Bank. It offers commercial and retail banking services, which include deposit accounts, lending, wealth management, and online banking. It provides financial solutions that range from traditional banking products to sophisticated investment and payment processing services.
The company’s Q4 2024 performance was boosted by an 8% sequential increase in fee revenues. This surge directly contributed to the company’s strong operating earnings, which reached $26 million in Q4. Key contributors to this growth included higher gains from SBA (Small Business Administration) loan sales, increased BOLI (Bank Owned Life Insurance) revenues, and seasonal revenue-sharing fees that exceeded the typical run rate by ~$1.5 million.
This quarter marked the fourth consecutive period of solid fee revenue growth. The 39% year-over-year increase in operating non-interest income also reflects the strength of the fee-based businesses. Berkshire Hills Bancorp Inc. (NYSE:BHLB) now plans to capitalize on this momentum by optimizing its SBA loan sales strategy and actively exploring further expansion of its BOLI offerings. The primary focus remains on maintaining and further growing fee revenue.
9. Helen of Troy Ltd. (NASDAQ:HELE)
Forward P/E Ratio as of March 19: 6.49
Market Capitalization as of March 19: $1.18 billion
Number of Hedge Fund Holders: 28
Helen of Troy Ltd. (NASDAQ:HELE) is a consumer products company that operates through Home & Outdoor and Beauty & Wellness segments. It offers a range of products, which include kitchenware, outdoor gear, beauty appliances, and wellness solutions. These are marketed under well-known brands such as OXO, Hydro Flask, Osprey, and Drybar.
The Home & Outdoor segment achieved a 4.3% increase in net sales in FQ3 2025. This growth was a direct result of positive contributions from all three brands within the segment: OXO, Hydro Flask, and Osprey, together with strength observed in international markets. OXO’s growth came from distribution expansions, particularly with Walmart. This included the successful launch of the POP food storage line in 2,000+ Walmart stores, as well as the initiation of a new product line test in ~350 stores. Hydro Flask experienced growth driven by new distribution partnerships with Target and Costco. Osprey contributed with its Daylite line experiencing double-digit sales growth.
Helen of Troy Ltd.’s (NASDAQ:HELE) strategy for the Home & Outdoor segment focuses on sustaining this positive momentum through continued distribution gains, product innovation, and targeted marketing initiatives. The emphasis will be on maximizing shelf productivity and expanding reach in both domestic and international markets.
Palm Valley Capital Fund stated the following regarding Helen of Troy Limited (NASDAQ:HELE) in its Q4 2024 investor letter:
“We sold out of two positions during the fourth quarter: Crawford & Co. (ticker: CRD/A) and Helen of Troy Limited (NASDAQ:HELE). We acquired shares of the consumer products company Helen of Troy in the third quarter after an ugly July earnings report. The stock rose past our valuation after the following period’s results were better than expectations.”
