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.”
8. EZCORP Inc. (NASDAQ:EZPW)
Forward P/E Ratio as of March 19: 10.73
Market Capitalization as of March 19: $780.12 million
Number of Hedge Fund Holders: 28
EZCORP Inc. (NASDAQ:EZPW) provides pawn services in the US and Latin America. It offers pawn loans secured by personal property and retails forfeited collateral and pre-owned merchandise. It operates through the US Pawn and Latin America Pawn segments. It provides digital services via EZ+ for online transaction management, under brands like EZPAWN and Empeño Fácil.
The company’s Pawn Loan Origination (PLO) segment achieved record revenue growth in FQ1 2025. PLO increased by 16% year-over-year and reached $282.9 million. This growth was supported by the increases in earning assets, which rose by 20% in FQ1, and Pawn Service Charge (PSC) revenues, which rose by 13%. EZCORP Inc. (NASDAQ:EZPW) plans to continue driving PLO growth through a focus on operational excellence, enhanced customer engagement, and the strategic use of technology.
The company implemented initiatives to enhance customer experience. These included expanding the third-party buy now pay later program and launching a longer-term layaway option. The introduction of the layaway option led to a 13% increase in new layaways. A layaway option allows customers to reserve an item by making partial payments over time, receiving it only after the full amount is paid. The Easy Plus rewards program also drove engagement and accounted for 77% of all transactions during FQ1.
7. American Axle & Manufacturing Holdings Inc. (NYSE:AXL)
Forward P/E Ratio as of March 19: 10.18
Market Capitalization as of March 19: $542.05 million
Number of Hedge Fund Holders: 28
American Axle & Manufacturing Holdings Inc. (NYSE:AXL) designs and manufactures driveline and metal forming technologies for electric, hybrid, and internal combustion vehicles. It operates through Driveline and metal-forming segments. It provides axles, driveshafts, and other driveline components, as well as engine, transmission, and safety-critical parts for light, commercial, and off-highway vehicles.
The company’s driveline business, notably the production of axles for full-size trucks, drives most of its revenue. The company has secured this essential business for long-term stability and expansion. Significant contract wins have cemented the company’s position in the market. It has secured contracts with multiple customers for next-generation full-size truck axles, representing over $10 billion in lifetime revenue. American Axle & Manufacturing Holdings Inc. (NYSE:AXL) recently announced a contract extension to supply power transfer units for the Ford Maverick and Bronco Sport vehicles.
To maximize the performance of this segment, the company is prioritizing operational efficiency. In 2024, the company’s sales were ~$6.1 billion. The company is now actively pursuing strategic initiatives, such as the pending combination with Dowlais, which is expected to generate $300 million in run-rate synergies, to strengthen its position in the driveline market.
6. MRC Global Inc. (NYSE:MRC)
Forward P/E Ratio as of March 19: 10.63
Market Capitalization as of March 19: $1.06 billion
Number of Hedge Fund Holders: 29
MRC Global Inc. (NYSE:MRC) distributes pipes, valves, fittings, and infrastructure products. It serves the energy, industrial, and natural gas sectors. It offers a range of products and value-added services that support the construction, maintenance, and repair of equipment operating in demanding environments.
The Gas Utilities sector at the company demonstrated notable stability and grew its revenue by 3% sequentially in Q3 2024, which amounted to $295 million. This growth was driven by heightened customer spending due to seasonal factors and a return to normal purchasing patterns as customers completed their destocking processes. Q3 marked the third consecutive period of sequential growth for the Gas Utilities sector.
Industry analysts and several of the company’s largest customers have publicly announced plans to increase capital spending on natural gas infrastructure maintenance projects in 2025. Furthermore, projected annual capital expenditure growth rates for the gas utilities served are expected to range from 4% to 6% over the next five years. This forecast reinforces the sector’s healthy growth environment and long-term viability, which will benefit MRC Global Inc. (NYSE:MRC) in the long run.
Alluvial Capital Management has been optimistic about MRC Global Inc.’s (NYSE:MRC) strong earnings guidance, debt reduction plan, and potential for positive catalysts. It stated the following regarding the company in its first quarter 2024 investor letter:
“MRC Global Inc. (NYSE:MRC), our equipment distributor to oil and gas drillers and gas utilities, also had good news for us. The company issued healthy 2024 earnings guidance and revealed a plan to pay off its term loan with a combination of cash flow and a draw on its asset-backed loan facility. The market responded positively, but shares still change hands at just five times 2024 operating cash flow. MRC has also announced it will provide activist hedge fund Engine Capital with a board seat. I welcome the additional oversight that Engine will provide. There is no word on progress toward resolving the situation with the unhappy holder of MRC Global’s convertible preferred shares, but a resolution could come at any time and would serve as a positive catalyst for MRC shares.”
5. Green Plains Inc. (NASDAQ:GPRE)
Forward P/E Ratio as of March 19: 9.52
Market Capitalization as of March 19: $342.27 million
Number of Hedge Fund Holders: 29
Green Plains Inc. (NASDAQ:GPRE) produces low-carbon fuels and operates through the Ethanol Production and Agribusiness and Energy Services segments. It produces, stores, and transports ethanol, distiller grains, and renewable corn oil. It also engages in grain procurement, and commodity marketing, and provides essential grain drying and storage services to producers.
The company is repositioning its Ethanol Production segment and shifting from a phase of innovation to a focused commercialization strategy. Despite challenges that resulted in a net loss of $54.9 million in Q4 2024, the Ethanol Production segment achieved $44.7 million in EBITDA for the full year 2024. The company’s ethanol plants operated at a 92% utilization rate during Q4 and are targeting a consistent mid-90s rate in 2025. This excludes the temporarily idled Fairmont facility.
A pivotal initiative for this segment is the implementation of carbon capture technology at its Nebraska plants, which is expected to commence in H2 2025. It’s projected to contribute ~$130 million in annualized financial contribution while utilizing a $70 per ton private carbon credit value. Green Plains Inc. (NASDAQ:GPRE) is increasing corn oil yields, with the potential to produce ~300 million pounds annually. Each 10-cent increase in corn oil value translates to an additional $30 million in EBITDA.
Green Plains Inc. (NASDAQ:GPRE) shareholders are poised for significant gains through a near-term company sale, driven by activist pressure and favorable market conditions. White Brook Capital Partners stated the following regarding the company in its Q3 2024 investor letter:
“Green Plains Inc. (NASDAQ:GPRE) management and board continue to find themselves under activist scrutiny with long-term shareholders consolidating around a sale of the company. A small but underappreciated debt instrument that prohibited the company’s sale was paid down on October 1st and so the review process and consideration by potential acquirers that should have begun during the 1st quarter, can now lead to actionable behavior. As it stands, management and the board are staring at an embarrassing proxy contest they will overwhelmingly lose in early 2025 if they don’t sell the Company in the fourth quarter or early in the first. As collaborating evidence, an industry comparable transaction occurred during the third quarter that supports shareholder contention that a significantly higher stock price can be achieved through the company’s sale, in whole or in parts. We expect movement in the short term.”
4. PACS Group Inc. (NYSE:PACS)
Forward P/E Ratio as of March 19: 6.31
Market Capitalization as of March 19: $1.87 billion
Number of Hedge Fund Holders: 31
PACS Group Inc. (NYSE:PACS) operates and manages a network of skilled nursing and assisted living facilities across the US. It provides senior care services and engages in the acquisition and ownership of healthcare-related properties. It delivers different care options to meet the diverse needs of the senior population.
Recent analyst adjustments included Macquarie lowering its price target to $24 from $42 while maintaining an Outperform perform rating on the company, and Truist Financial reducing theirs to $32 from $46, with a Buy rating. However, PACS Group Inc. (NYSE:PACS) is demonstrating aggressive growth in its post-acute care facility operations. This expansion is driven by strategic acquisitions from November 2024 that included 8 facilities in Pennsylvania, which added 1,199 beds and marked the company’s entry into a new state.
Further expansion occurred in December 2024 with the acquisition of 11 facilities in Tennessee, which added 1,310 beds and extended the company’s footprint to 17 states. In FQ1 2025, PACS Group Inc. (NYSE:PACS) anticipates acquiring its 12th nursing facility of the period. Employing a flexible acquisition strategy, that utilizes both lease and purchase models, the company operates 314+ facilities, employs 40,000+ individuals, and provides care to ~30,000 patients daily.
3. Garrett Motion Inc. (NASDAQ:GTX)
Forward P/E Ratio as of March 19: 7.12
Market Capitalization as of March 19: $1.84 billion
Number of Hedge Fund Holders: 32
Garrett Motion Inc. (NASDAQ:GTX) designs and manufactures advanced turbocharging, air and fluid compression, and electric motor technologies for the automotive and industrial sectors. It provides innovative solutions for boosting internal combustion engines and develops cutting-edge technologies for electric and fuel cell applications.
The company’s Turbocharger segment achieved significant milestones in 2024. The company secured numerous light vehicle gasoline contracts across all geographical regions, which include notable expansions in the US and China, particularly with emerging Chinese manufacturers. These wins encompassed a range of powertrain technologies, which include plug-in hybrids and range extenders. Garrett Motion Inc. (NASDAQ:GTX) aims to maintain its business win rate of over 50% in the Turbocharger segment in 2025. It’s also investing in R&D with a focus on zero-emission technologies that complement the Turbocharger segment.
Garrett Motion Inc. (NASDAQ:GTX) made strides in the commercial vehicle sector as well and secured several contracts for natural gas on-highway applications in China, with launches scheduled as early as 2026. The segment broadened its portfolio by securing new awards for marine and backup power applications, which feature the company’s largest turbochargers, with production slated to commence in 2026.
McIntyre Partnerships believes that Garrett Motion Inc. (NASDAQ:GTX) is significantly undervalued due to market overreaction to BEV concerns. The company’s strong core business, BEV potential, and buybacks are being overlooked. Here’s what McIntyre Partnerships said in its Q4 2024 investor letter:
“Garrett Motion Inc. (NASDAQ:GTX) is a leading manufacturer in the moat-rich turbocharger (TB) market, with a global end-market and industry-leading margins. As TBs are not used in battery electric vehicles (BEVs), the market has concerns about GTX’s terminal value, which is suppressing its valuation. GTX trades ~5x my 2025 levered FCF with leverage at 2x EBITDA. Beyond its core business in TBs, GTX has a separate BEV growth story that is currently pre-revenue with high upfront costs, depressing GTX’s reported run-rate FCF. As a result, I believe GTX is even cheaper on owners’ earnings than the headline numbers suggest. Beyond its BEV investments, GTX has been using its FCF to buy back significant amounts of stock. Since 2022, GTX has retired almost one-third of its shares outstanding. If either BEV penetration is less bad than feared or GTX has success in its BEV investments, I believe GTX shares are significantly undervalued.
Before I dig into numbers, I want to revisit GTX’s TB business, which I believe has a deep moat and is highly predictable. TBs are a high-tech, mission-critical component of a car’s engine. The TB market is a duopoly between BWA and GTX. While there are also smaller Asian competitors, GTX and BWA enjoy significant engineering and R&D advantages over their peers, which creates a moat and allows GTX to earn among the highest margins and lowest annual price downs of any publicly traded auto supplier. TBs are essentially mini-jet engines that take the exhaust fumes and push that air back into the engine, increasing power and fuel efficiency. TBs are highly sophisticated devices – the TB’s turbine spins at up to 150,000 RPMs, yet the distance between the spinning turbine and the wall of the TB can be as small as a seventh the width of a human hair. GTX’s years of R&D allow them to deliver products that competitors cannot match. As a testament to this, Bosch and Mahle, two of the largest auto suppliers in the world, launched a TB joint venture in the late 2000s with the explicit blessing and support of GTX’s customers, the auto OEMs. A scaled competitor teaming up with your customers to break your duopoly is a business nightmare, yet after a decade, Bosch-Mahle gave up and exited the space. They could not match GTX’s products. Finally, the TB is a critical component of an engine, which is, in turn, the most important component of a car. Engines are designed years in advance, and once a product is designed into an engine, it is virtually impossible to design out. Once Mercedes designs a Garrett TB into an AMG engine, GTX has an almost guaranteed 100% renewal product with a multi-year life cycle. GTX’s backlog is exceptionally sticky and 90% booked 3+ years out. While BEV is a wild card, GTX has visibility on its core operations for years…” (Click here to read the full text)
2. Hawaiian Electric Industries Inc. (NYSE:HE)
Forward P/E Ratio as of March 19: 9.83
Market Capitalization as of March 19: $1.9 billion
Number of Hedge Fund Holders: 35
Hawaiian Electric Industries Inc. (NYSE:HE) is an electric utility company that generates, transmits, and distributes electricity across the Hawaiian Islands. It focuses on both traditional and renewable energy sources, which include wind, solar, and geothermal. It also invests in non-regulated renewable energy and sustainable infrastructure projects within the state.
In 2024, the company’s utility segment made significant strides in renewable energy integration and achieved a 36% Renewable Portfolio Standard (RPS), which was up from 33% in 2023. Simultaneously, the utility prioritized affordability for its customers. The average residential bill decreased by 7% in 2024. Recognizing the importance of wildfire safety, the segment invested ~$120 million in 2024 to enhance its infrastructure and implement preventative measures. This included launching a public safety power shutoff program, replacing utility poles, upgrading power lines, clearing vegetation, and installing weather stations and AI-assisted cameras.
In January, the utility filed an updated wildfire safety strategy with the Public Utilities Commission (PUC) and outlined a three-year action plan from 2025 to 2027. This plan is estimated to cost ~$450 million, with $400 million allocated to capital expenditure. Despite these investments, the utility’s core net income was $181 million in 2024. The utility is now pursuing legislative initiatives to establish a wildfire recovery fund and support independent power producer financing for clean energy projects.
1. Phinia Inc. (NYSE:PHIN)
Forward P/E Ratio as of March 19: 9.71
Market Capitalization as of March 19: $1.80 billion
Number of Hedge Fund Holders: 37
Phinia Inc. (NYSE:PHIN) develops and manufactures integrated components and systems. It operates through Fuel Systems and Aftermarket segments. It provides advanced fuel injection systems and aftermarket solutions for vehicles and industrial applications. It enhances fuel efficiency and reduces emissions for both traditional and hybrid technologies.
The company’s Aftermarket segment experienced a 4.9% year-over-year increase in sales in Q4 2024, which was fueled by higher volumes and favorable pricing across all regions. In 2024, the company expanded its aftermarket offerings by introducing over 3,600 new SKUs. The Aftermarket segment also secured new business wins, which included contracts with major customers in Europe, South America, and Southeast Asia. A multi-year contract to supply remanufactured products to a major Commercial Vehicle OEM in South America and the development of new distributor relationships in Southeast Asia are key initiatives to drive further growth.
Although the Aftermarket segment’s margin decreased by 1.4% in Q4, ending at 14.9%, due to increased freight and other charges, the overall performance remained robust. Phinia Inc. (NYSE:PHIN) plans to continue focusing on growing its Aftermarket business. The company will use its human and manufacturing capital efficiently while maintaining a financially disciplined approach.
Voss Capital sees the company as an auto parts supplier with substantial market share potential in its fuel systems business. Overblown EV penetration concerns present a favorable environment as well. Voss Capital stated the following regarding Phinia Inc. (NYSE:PHIN) in its Q3 2024 investor letter:
“We are long shares of PHINIA Inc. (NYSE:PHIN). A recent spin-off from Borg Warner (BWA), the company is an auto parts supplier that operates two distinct businesses – 1) Fuel Systems (original equipment manufacturer supplier) and 2) Aftermarket automotive products supplier.
The Fuels Systems business is uniquely positioned to capitalize on attractive competitive dynamics that we believe will allow the company to take gobs of market share in its niche markets over the coming years. As an internal combustion engine (ICE) parts supplier pure play, overly hyped expectations of electric vehicle (EV) penetration created an especially good long-term buying opportunity in PHIN earlier in the year…” (Click here to read the full text)
While we acknowledge the growth potential of Phinia Inc. (NYSE:PHIN), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PHIN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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