Below we present the list of the 5 Best Small-Cap Stocks To Buy Now. For the full list and intro, be sure to check out the 10 Best Small-Cap Stocks To Buy Now.
- Synaptics Incorporated (NASDAQ:SYNA)
The back-half of our list of the 10 Best Small-Cap Stocks To Buy Now begins with Synaptics Incorporated (NASDAQ:SYNA), a company that operates in the PC, mobile, and IoT spaces. Synaptics has been a turnaround play over the past few years and found a believer in billionaire Ken Fisher’s Fisher Asset Management, which opened a stake in SYNA in Q2 2018 and which owned 1.28 million shares at the end of September 2020. Other hedge funds tracked by Insider Monkey are also becoming more bullish, with ownership of the stock among that select group of funds more than doubling over the last year.
Synaptics still has an uphill climb ahead of it however. With the global PC and mobile markets expected to be mostly stagnant in the years to come, the company will be relying heavily on its IoT segment to deliver some badly needed growth. Revenue has fallen over each of the last three years, sliding from $1.72 billion in 2017 to just $1.33 billion in 2020. On the bright side, the company has boosted its gross profit margin by 13 percentage points over the past two years.
- KB Home (NYSE:KBH)
Fisher Asset Management owned 2.72 million shares of KB Home (NYSE:KBH) on September 30 after selling off less than 45,000 shares of the homebuilder during Q3. Fisher Asset held the most valuable position in the stock on June 30 among the funds tracked by Insider Monkey, 23 of whom were KBH shareholders, and that position jumped to over $104 million in value following a strong Q3 for the stock.
New home sales and orders have been surprisingly strong in 2020, jumping by 17% year-over-year. Furthermore, August’s seasonally-adjusted annual rate of new home sales topped 1 million for the first time in 14 years, before sliding back to 959,000 in September. The pandemic has in fact been a boon for the housing market, spurring added mobility in the marketplace through growing demand for houses with home offices and gyms.
In its Q3 investor letter, Keeley Asset Management said that it expects KB Home’s near-term demand to remain strong thanks to record-low mortgage rates and aging Millennials entering prime home-buying age.
- Cleveland-Cliffs Inc (NYSE:CLF)
Fisher Asset Management was one of the 25 hedge funds tracked by Insider Monkey that owned shares of Cleveland-Cliffs Inc (NYSE:CLF) at the end of Q2. Fisher made another large investment in CLF shares during the third quarter, adding over 4.56 million shares to its position and giving it a 4.35% stake in the mining company. That buying spree paid off handsomely for Fisher in October, as CLF shares jumped by nearly 30% following the company’s acquisition of steelmaker ArcelorMittal (NYSE:MT)’s U.S assets. In tandem with its purchase of AK Steel in March, Cleveland-Cliffs has become the largest steelmaker in the U.S, with investors excited about what the company is capable of now with its added scale.
- Stamps.com Inc. (NASDAQ:STMP)
Stamps.com Inc. (NASDAQ:STMP) lands in second spot, with Fisher Asset Management owning just over 609,000 shares of the online postage and shipping services provider, trimming its stake by 11% during the third quarter. The hedge fund sentiment towards Stamps.com Inc. (NASDAQ:STMP) began rebounding late last year after more than half of the stock’s hedge fund shareholders sold out of it between Q3 2018 and Q3 2019. Ownership of STMP has jumped by 50% this year among the hedge funds tracked by Insider Monkey.
Unfortunately for shareholders, as Stamps.com was one of the rare pandemic winners, it was likewise one of the big losers following Pfizer Inc. (NYSE:PFE)’s positive vaccine results, with shares sliding by about 10%. Stamps.com’s Q2 sales surged by 42% as pandemic-displaced companies and workers turned to online selling in droves. With a promising Covid vaccine on the horizon, investors are worried that Stamps could soon lose a sizable chunk of that new business.
- Meritage Homes Corp (NYSE:MTH)
Meritage Homes tops our ranking of the 5 Best Small-Cap Stocks To Buy Now. Fisher Asset Management has been a long-term shareholder of Meritage Homes Corp (NYSE:MTH), owning shares of the entry-level homebuilder since 2013. The firm’s enthusiasm for Meritage Homes hasn’t waned in the slightest since then, as its 1.37 million shares and 3.65% stake in the company ranked it as Fisher’s top small-cap stock pick as of September 30.
Other hedge funds tracked by Insider Monkey haven’t been overly enthusiastic about MTH historically, but ownership of the stock did nearly double in Q3 2019, a quarter during which Meritage reported a 22% jump in Q2 orders. The company did even better this year, with June orders surging by 66% year-over-year and Q3 orders rising by 71% amid the aforementioned boom in the housing market.
If you’re interested in adding some compelling tech stocks to your portfolio, don’t miss our article on the top 10 cloud computing stocks to buy.
Disclosure: None.
