In this article, we discuss 5 rebounding small-cap stocks to buy now. If you want to see more stocks in this category, check out Small Caps Begin to Rebound: 10 Stocks to Buy Now.
5. 4D Molecular Therapeutics, Inc. (NASDAQ:FDMT)
Number of Hedge Fund Holders: 11
Market Capitalization as of August 11: $337.856 million
1-month Share Price Gain as of August 11: 31.24%
4D Molecular Therapeutics, Inc. (NASDAQ:FDMT) is a California-based clinical-stage gene therapy company, developing a portfolio of gene therapy products in three segments – ophthalmology, cardiology, and pulmonology. The stock has rebounded 31.24% in the last month as of August 11.
Jefferies analyst Nalin Tejavibulya on June 22 initiated coverage of 4D Molecular Therapeutics, Inc. (NASDAQ:FDMT) with a ‘Buy’ rating and $22 price target. The company offers a “potentially differentiated” gene therapy platform with a pipeline that has five assets in Phase 1/2 testing across three key therapeutic areas, the analyst told investors. Incremental updates over the upcoming 12 to 24 months could reinforce platform differentiation and the analyst sees the risk/reward ratio as being “highly attractive” given the large application of its potential treatments.
According to Insider Monkey’s data, 11 hedge funds were long 4D Molecular Therapeutics, Inc. (NASDAQ:FDMT) at the end of the first quarter of 2022, compared to 13 funds in the previous quarter. Andreas Halvorsen’s Viking Global is the leading position holder in the company, with 3.9 million shares worth $59.5 million.
4. Berry Corporation (NASDAQ:BRY)
Number of Hedge Fund Holders: 16
Market Capitalization as of August 11: $752.162 million
1-month Share Price Gain as of August 11: 35.09%
Berry Corporation (NASDAQ:BRY) is a Texas-based upstream energy company that manages conventional oil reserves in the western United States. Berry Corporation (NASDAQ:BRY) is one of the small-caps that rebounded strongly in the last month, with the stock gaining 35%. On August 11, the company declared a quarterly dividend of $0.62 per share. The dividend is payable on August 25, to shareholders of record on August 15. The stock delivers a dividend yield of 2.46% as of August 11.
On July 22, Piper Sandler analyst Mark Lear maintained an ‘Overweight’ rating on Berry Corporation (NASDAQ:BRY) and lowered the price target on the stock to $12 from $15. The energy sector has been volatile the last six weeks due to recession threats and cost inflation, but with the sector “de-rating faster than the pullback in crude,” the setup is “broadly favorable” for exploration and production companies heading into Q2 earnings, the analyst told investors.
According to Insider Monkey’s data, 16 hedge funds were long Berry Corporation (NASDAQ:BRY) at the end of March 2022, compared to 15 funds a quarter ago. Howard Marks’ Oaktree Capital Management is the largest stakeholder of the company, with roughly 13 million shares worth $133.2 million.
Here is what Heartland Value Fund had to say about Berry Corporation (NASDAQ:BRY) in its Q4 2021 investor letter:
“Uncertainty about economic growth in the coming quarters weighed on Energy companies in the broader market. Longer term, we believe the capital discipline oil producers have shown over the past few years will provide support for energy prices as increased incremental demand will continue to absorb modest production increases. The Fund’s holdings in the sector fared better, and the portfolio owns well managed producers with strong balance sheets. Longtime holding Berry Corporation (BRY) fits this profile.
We highlighted Berry in the third quarter commentary praising its seasoned management team and financial strength. The company maintained its record of shareholder-friendly policies during the most recent quarter.
The move, along with compelling valuations—shares trade at just 4.7X EV/EBITDA—makes Berry, in our view, an attractive opportunity. Management remains disciplined in allocating capital, reining in debt, and focusing on high-margin production. This approach, along with aggressive efforts to return capital to shareholders through share repurchases and increased dividends, should attract additional investor interest.”
3. Castle Biosciences, Inc. (NASDAQ:CSTL)
Number of Hedge Fund Holders: 12
Market Capitalization as of August 11: $926.747 million
1-month Share Price Gain as of August 11: 41%
Castle Biosciences, Inc. (NASDAQ:CSTL) was founded in 2007 and is headquartered in Friendswood, Texas. The commercial-stage diagnostics company specializes in diagnostic and prognostic testing services for dermatological cancers. Castle Biosciences, Inc. (NASDAQ:CSTL) posted its Q2 results on August 8, reporting a GAAP loss per share of $0.06, beating expectations by $0.70. Its revenue of $34.8 million climbed 52.9% year-over-year and outperformed the Wall Street consensus by $6.43 million. The stock has recovered 41% in the last month.
On August 9, Baird analyst Catherine Ramsey Schulte raised the price target on Castle Biosciences, Inc. (NASDAQ:CSTL) to $48 from $44 and kept an ‘Outperform’ rating on the shares. The analyst observed that management highlighted ongoing execution by its sales force and territory expansion, as well as indications of rebounding patient volumes. Castle Biosciences, Inc. (NASDAQ:CSTL) also detailed enhanced Medicare collection for DecisionDx-SCC, a primary long-term driver, although intermediate-term ASP dynamics remain partially unclear.
According to Insider Monkey’s data, Castle Biosciences, Inc. (NASDAQ:CSTL) was part of 12 hedge funds’ portfolios at the end of Q1 2022, with collective stakes worth $134.4 million. ARK Investment Management is the biggest shareholder of the company, with 1.17 million shares worth $52.5 million.
Here is what Wasatch Micro Cap Fund had to say about Castle Biosciences, Inc. (NASDAQ:CSTL) in its Q4 2021 investor letter:
“Castle Biosciences, Inc. (CSTL) was also a significant detractor. The company offers test services for dermatological cancers that include various melanomas, as well as metastatic squamous cell carcinoma. Like a number of other medical conditions, testing and diagnosis of melanomas have been hampered during the pandemic as potential patients avoided office visits with their doctors. Looking forward, we expect rebounding patient volumes and better insurance reimbursements to drive a substantial improvement in Castle’s revenues.”
2. Absci Corporation (NASDAQ:ABSI)
Number of Hedge Fund Holders: 5
Market Capitalization as of August 11: $482.366 million
1-month Share Price Gain as of August 11: 47.06%
Absci Corporation (NASDAQ:ABSI) is based in Washington and operates as a drug and target discovery company. On July 7, Absci Corporation (NASDAQ:ABSI) announced a collaboration with a stealth-mode biotech company for developing antibody drug conjugates (ADCs) for cancer treatments, using Absci Corporation (NASDAQ:ABSI)’s Bionic Protein technology. The stock has gained 47% in the last month as of August 11.
Truist analyst Robyn Karnauskas initiated coverage of Absci Corporation (NASDAQ:ABSI) on July 18 with a ‘Buy’ recommendation and an $8 price target. The analyst is optimistic about the company’s position as a “pioneering, early stage player” in two emerging fields – tech enabled biotech and next-gen biologics. The stock is trading near to cash, but she sees upside potential over the next 12-24 months from potential partnerships, platform validation, and read-through from validation of other players in the sector, the analyst told investors.
According to Insider Monkey’s data, Absci Corporation (NASDAQ:ABSI) was part of 5 hedge funds’ portfolios at the end of Q1 2022, compared to 9 funds in the prior quarter. Jeremy Green’s Redmile Group is the largest stakeholder of the company, with more than 8 million shares worth $67.70 million.
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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