Small Caps Begin to Rebound: 5 Stocks to Buy Now

1. Vital Farms, Inc. (NASDAQ:VITL)

Number of Hedge Fund Holders: 14

Market Capitalization as of August 11: $573.588 million 

1-month Share Price Gain as of August 11: 59%

Vital Farms, Inc. (NASDAQ:VITL) is a Texas-based company that provides pasture-raised eggs and related products in the United States. Vital Farms, Inc. (NASDAQ:VITL) is one of the small-cap stocks that have strongly rebounded in the last month, with the shares climbing 59% as of August 11. On August 4, the company reported Q2 revenue of $82.87 million, outperforming Wall Street’s consensus estimates by $3.26 million and rising by 37.37% on a year-over-year basis. 

On July 20, Morgan Stanley analyst Pamela Kaufman upgraded Vital Farms, Inc. (NASDAQ:VITL) to ‘Overweight’ from ‘Equal Weight’ with a $12 price target. The company is positioned advantageously in the higher growth specialty egg market, the analyst told investors. She stressed that Vital Farms, Inc. (NASDAQ:VITL) is an “underappreciated growth story” within the packaged food sector that trades at an attractive entry point. The analyst sees “multiple tailwinds” for sales growth, such as the increasing consumer preference for specialty eggs and the multiple retailer and government pledges to shift towards cage-free egg production.

According to Insider Monkey’s data, 14 hedge funds were bullish on Vital Farms, Inc. (NASDAQ:VITL) at the end of Q1 2022, up from 9 funds in the prior quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP is the leading shareholder of the company, with 421,521 shares worth $5.2 million. 

Baron Discovery Fund highlighted a few stocks in its Q4 2020 investor letter and Vital Farms Inc. (NASDAQ:VITL) was one of them. Here is what it said: 

“Vital Farms, Inc., a producer of butter and pasture-raised eggs, underperformed during the quarter after reaching its post-IPO highs. While the company beat Street expectations for the third quarter, investors shifted near-term focus to more immediate beneficiaries of the COVID-19 vaccine. Longer-term, we expect Vital Farms to benefit from increased consumer focus on better-for-you and to grow its platform through category expansion and distribution gains in natural and traditional grocery stores.”

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