Top 10 Small Cap Stocks to Buy with the Highest Upside Potential

8. Materion Corp. (NYSE:MTRN)

Analyst Upside: 41.75%

Market Cap: $1.99 billion 

Number of Hedge Fund Holders: 14

Materion Corp. (NYSE:MTRN) produces engineered materials for various thermal, electrical, electronic, and structural applications. Its operations provide engineered solutions comprising beryllium and non-beryllium through its Performance Materials segment. Through its Electronics Materials segment, it produces precious and non-precious metals, chemicals, microelectronics packaging, and other specialty metal products. The company also operates in optical filters, precision thin-film coatings, and assemblies through its Precision Optics segment.

Although the market has been soft for the company over the last several quarters, it is optimizing its footprint, improving the cost structure of the company, and aligning its portfolio with global megatrends to improve its operations. Materion Corp. (NYSE:MTRN) has taken several steps to optimize its footprint over the last year. With a focus on driving efficiency and scale, it closed a facility in China, consolidating production into other facilities in North America and Asia. It is in the process of right-sizing two additional facilities in Asia, which is expected to be completed early in fiscal 2025, and is closing a facility in New Mexico. These actions are focused on improving the performance of the company’s electronic materials business. As a result of these initiatives, the business is now delivering around 20% EBITDA margins, reflecting approximately 400 basis points improvement on lower volume.

Fiscal Q3 2024 was the second consecutive quarter that the company saw year-over-year growth in overall semi-sales in the semiconductor sector. Since the increased demand for logic and memory applications is boosting this volume increase, Materion Corp. (NYSE:MTRN) is capitalizing on opportunities in the sector with its broad semiconductor solutions and product portfolio. The company recently entered into an agreement to serve as the technology partner for a major supplier of semiconductor processing equipment. It takes the eighth spot on our list of the top small cap stocks to buy with the highest upside potential.