Top Investors’ Stock Portfolio: 5 Small Cap Stocks to Buy

In this article, we will discuss 5 small-cap stocks to buy now.  If you want to explore similar stocks, you can also read Top Investors’ Stock Portfolio: 10 Small Cap Stocks To Buy.

5. Genco Shipping & Trading Limited (NYSE:GNK)

Market Cap as of November 4: $626.18 Million

Number of Hedge Fund Holders: 16

Genco Shipping & Trading Limited (NYSE:GNK) is a shipping company that owns and operates dry bulk carrier vessels. The company transports iron ore, coal, grain, steel products, and other dry bulk cargoes along worldwide shipping routes. Genco Shipping & Trading Limited (NYSE:GNK) is trading at bargain levels and is offering an attractive buying opportunity. The company is trading at a PE multiple of 2x and is offering a forward dividend yield of 13.50%. The company has free cash flows of $125.2 million. Genco Shipping & Trading Limited (NYSE:GNK) is ranked high on the top investors’ stock portfolio.

This September, Stifel analyst Benjamin Nolan took coverage of Genco Shipping & Trading Limited (NYSE:GNK) with a Buy rating and a $20 price target. On October 10, B. Riley analyst Liam Burke revised his price target on Genco Shipping & Trading Limited (NYSE:GNK) to $27 from $31 and maintained a Buy rating on the shares.

At the end of Q2 2022, 16 hedge funds were bullish on Genco Shipping & Trading Limited (NYSE:GNK) and held stakes worth $142.4 million in the company. Of those, Centerbridge Partners is the top shareholder in the company and has a position worth $88.18 million.

4. Daseke, Inc. (NASDAQ:DSKE)

Market Cap as of November 4: $340.38 Million

Number of Hedge Fund Holders: 17

Daseke, Inc. (NASDAQ:DSKE) is an American trucking company that provides transportation and logistics solutions in the United States, Canada, and Mexico. The company operates through two business segments: Flatbed Solutions and Specialized Solutions. Daseke, Inc. (NASDAQ:DSKE) has a strong cash position and is efficient at utilizing its resources. Daseke, Inc. (NASDAQ:DSKE) has free cash flows of $77.6 million and on September 30, the company announced that its board of directors has authorized a share buyback program of $40 million of the company’s outstanding common stock. The stock is ranked on the top investors’ stock portfolio.

On July 28, Stifel analyst Bert Subin upgraded Daseke, Inc. (NASDAQ:DSKE) to Buy from Hold and reiterated his $10 price target on the shares.

At the close of Q2 2022, Daseke, Inc. (NASDAQ:DSKE) was a part of 17 investors’ portfolios that held collective stakes of $54.3 million in the company. Of those, Alta Fox Capital Management was the leading investor in the company and held a position worth $14.2 million.

3. Herbalife Nutrition Ltd. (NYSE:HLF)

Market Cap as of November 4: $1.59 Billion

Number of Hedge Fund Holders: 28

Herbalife Nutrition Ltd. (NYSE:HLF) is a global company that sells weight-loss and nutritional products through a network of independent distributors. The company was founded in 1980, and its headquarters are in Los Angeles, California. On October 31, Herbalife Nutrition Ltd. (NYSE:HLF) announced earnings for the fiscal third quarter of 2022. The company reported an EPS of $0.91 and beat estimates by $0.11. The company generated a revenue of $1.30 billion for the quarter.

This November, Citi analyst Chasen Bender updated his price target on Herbalife Nutrition Ltd. (NYSE:HLF) to $26 from $30 and reiterated a Buy rating on the shares. On November 1, B. Riley analyst Jeff Van Sinderen revised his price target on Herbalife Nutrition Ltd. (NYSE:HLF) to $31 from $38 and maintained a Buy rating on the shares. The stock is ranked third on the top investors’ stock portfolio.

At the end of Q2 2022, 28 hedge funds were long Herbalife Nutrition Ltd. (NYSE:HLF) and held stakes worth $893.7 million in the company. Of those, Route One Investment Company was the top investor in the company and disclosed a position worth $221.7 million.

2. The ODP Corporation (NYSE:ODP)

Market Cap as of November 4: $1.94 Billion

Number of Hedge Fund Holders: 32

The ODP Corporation (NYSE:ODP) is a leading provider of office products and services, including office supplies, technology products and solutions, business machines and related services, and office furniture. The ODP Corporation (NYSE:ODP) has a strong cash position and has free cash flows of $99 million. The stock is currently trading at an attractive valuation and, as of November 4, has a trailing twelve-month PE ratio of 11.21. The ODP Corporation (NYSE:ODP) is ranked high among the top investors’ stock portfolio.

In addition to having a strong cash position, The ODP Corporation (NYSE:ODP) reinvests in itself. On November 2, The ODP Corporation (NYSE:ODP) announced that its board of directors has authorized a share buyback program of $1 billion, available through 2025.

At the end of Q2 2022, 32 hedge funds disclosed ownership of stakes in The ODP Corporation (NYSE:ODP) and held collective stakes of $372.8 million in the company. As of June 30, HG Vora Capital Management is the largest investor in The ODP Corporation (NYSE:ODP) and holds a position worth $151.2 million in the company.

1. Algoma Steel Group Inc. (NASDAQ:ASTL)

Market Cap as of November 4: $770.14 Million

Number of Hedge Fund Holders: 45

Algoma Steel Group Inc. (NASDAQ:ASTL) is a leading North American producer and provider of steel products. Algoma Steel Group Inc. (NASDAQ:ASTL) is one of the stocks that are a part of the top investors’ stock portfolio. Algoma Steel Group Inc. (NASDAQ:ASTL) is profitable, cash-rich, and efficient at making profits for shareholders. The company has a trailing twelve-month operating margin of 37.58% and an ROE of 107.75%. Algoma Steel Group Inc. (NASDAQ:ASTL) has free cash flows of over C$1.19 billion and, as of November 4, is awarding investors with a forward dividend yield of 2.72%.

This September, BMO Capital analyst David Gagliano revised his price target on Algoma Steel Group Inc. (NASDAQ:ASTL) to C$14 from C$16 and maintained an Outperform rating on the shares. On October 20, Stifel analyst Ian Gillies updated his price target on Algoma Steel Group Inc. (NASDAQ:ASTL) to C$10.75 from C$11.25 and reiterated a Hold rating on the shares.

At the close of Q2 2022, Algoma Steel Group Inc. (NASDAQ:ASTL) was a part of 45 investors’ portfolios that held collective positions worth $446 million in the company. As of June 30, Contrarian Capital is the top shareholder in Algoma Steel Group Inc. (NASDAQ:ASTL) and has stakes worth $74 million in the company.

Here is what Nordstern Capital had to say about Algoma Steel Group Inc. (NASDAQ:ASTL) in its third-quarter 2022 investor letter:

“The world is short on raw materials and energy. Nordstern Capital has increased its exposure to raw materials and energy. Recession fears may temporarily suppress demand and prices. The fundamental issue, however, is a sustainable lack of supply, caused by decade-long underinvestment. The shortages cannot be resolved in the short to medium term.

Currently suppressed stock prices offer a wonderful opportunity for our commodity businesses to buy back their own shares. For instance, Algoma Steel Group (NASDAQ:ASTL) reduced its diluted share count this year from 177 million to 111 million. Nonetheless, ASTL’s share price has come down 50%, because US HRC steel prices per ton declined in the past year from $2,000 to currently $713. Today, ASTL has $500m in net cash and a market capitalization of about $700m. The company is profitable even in the current recessionary environment. The CFO expects annual mid-cycle free cash flow generation greater than the current ASTL enterprise value. This is one illustrative example. ASTL is not alone. Many present-day commodity businesses are cash and earnings rich and can use weak stock prices for aggressive buybacks.”

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