In this article, we’ll take a look at 12 cash-rich small-cap stocks to invest in. To see more such companies, go directly to: 5 cash rich small caps to invest in.
In 2022, standard diversified portfolios will perform their worst in a century. Despite this one-year market decline, investors are looking to get their hands on some of it, and small-caps could be a big part of it. Bank of America chief investment strategist Michael Hartnett says small caps are generally a smart way to get closer to an economic recovery, and sometime in 2023, the market could be in a recession. The outlook looks bright as we expect a recovery without further delay.
Small- and mid-cap stocks “consistently” outperform large-cap stocks, according to a Wespass report that cited research papers by Nobel laureate Eugene Fama and co-author Ken French. One common belief that seems to support this outlook is that small-cap companies are less mature, innovative, and fast-growing industries such as biotechnology, robotics, and specialized software. There is a tendency to participate in the industry. Large-cap stocks, by contrast, appear to favor stable, low-growth industries such as healthcare, consumer goods, and telecommunications.
Small-cap stocks such as Algoma Steel Group (NASDAQ:ASTL), Mers NV (NASDAQ:MRUS), and Magnachip Semiconductor Corporation (NYSE:MX), detailed below, are just a handful of stocks on the market. It has managed to maintain stability in a stressed economy.
Photo by Adam Nowakowski on Unsplash
our methodology
To select stocks for the list, we first scoured the large universe of small caps, first picking names between $300 million and $2 billion in market capitalization, and then looking at enterprise value (EV). focused. As the name suggests, enterprise value is the total value of a company and is defined in terms of funding. This includes both the current stock price (market capitalization) and the cost to pay off the debt (net debt, or debt minus cash). We selected only small-cap stocks with market capitalization greater than enterprise value. This is because a lower ratio of EV to market capitalization indicates that a company has lower levels of debt and is considered a relatively safe investment.
After applying the first two checks, we got a long list of small caps. From this list, we have selected 12 stocks with the most hedge fund backings. To measure that metric, we used Insider Monkey’s database of 920 hedge funds. The list is ranked in ascending order according to the number of hedge funds that have stakes in the company.
12. ACM Research, Inc. (NASDAQ:ACMR)
Number of hedge fund holders: 14
Founded in Silicon Valley in 1998, ACM Research, Inc. (NASDAQ:ACMR) is a provider of wet processing technologies, systems and leading manufacturing products for a variety of semiconductor IC manufacturing and wafer level packaging applications. .
On Jan. 4, Needham analyst Quinn Bolton raised his price target on ACM Research (NASDAQ:ACMR) from $10 to $12, maintaining a buy rating on the stock. Analysts believe the company’s confirmed 2022 earnings outlook is a “promising sign” that there were no surprises in the fourth quarter from U.S. export restrictions. It also adds that ACM’s 2023 guidance suggests that spending by Chinese domestic manufacturers on mature nodes will remain strong this year.
At the end of the third quarter of 2022, 14 hedge funds in Insider Monkey’s database held $44.79 million worth of shares in ACM Research, Inc. (NASDAQ:ACMR), compared with 8 in the previous quarter. bottom. David Kowitz and Sheldon Kasowitz’s Induz Capital is the company’s largest shareholder as of the third quarter.
Along with Algoma Steel Group (NASDAQ:ASTL), Merus NV (NASDAQ:MRUS) and Magnachip Semiconductor Corporation (NYSE:MX), ACM Research (NASDAQ:ACMR) is a cash-rich small-cap. It is a stock and many investors are interested.
In its second quarter 2022 investor letter, wealth manager Baron Funds highlighted several stocks, one of which is ACM Research, Inc. (NASDAQ:ACMR). The fund said:
“ACM Research, Inc. (NASDAQ:ACMR) is a semiconductor manufacturing equipment company with operations primarily in China. In our view, ACM is a major beneficiary of the rapid expansion of fab capacity in China. Yes, it will gain domestic market share as fabs shift to local suppliers for self-sufficiency, and will expand overseas in the long term.
ACM believes it will be successful in expanding its product portfolio beyond industry leading wafer cleaning tools. ACM’s differentiated technology is reflected in an attractive gross margin profile and orders from Tier 1 chip makers, demonstrating a lasting competitive advantage. We expect him to generate strong double-digit earnings growth over the next few years. ”
11. Perion Network Limited (NASDAQ:Peri)
Number of hedge fund holders: 15
Perion Network Ltd. (NASDAQ:PERI) is an Israel-based technology company that provides digital advertising products and services. The company uses machine learning to operate his AI platform to bring intelligence to different phases of different campaigns.
Perion Network Ltd. (NASDAQ:PERI) has announced preliminary results for the fourth quarter of 2022. Revenue is expected to be $205 million, up from $158 million last year. Perion Network Ltd. (NASDAQ:PERI) reported non-GAAP EPS of $0.61, $0.06 above market expectations, according to the company’s third-quarter earnings call. Revenue for the quarter was $158.6 million, up 31.1% year-over-year.
Among the hedge funds tracked by Insider Monkey, Florida-based firm ARK Investment Management is the largest shareholder in Perion Network Ltd. (NASDAQ:PERI), with 123,205 shares worth more than $2.4 million. Overall, 15 hedge funds reported holding shares in the company at the end of the third quarter.
Ten. CarParts.com, Inc. (NASDAQ:PRTS)
Number of hedge fund holders: 22
CarParts.com, Inc. (NASDAQ:PRTS) is an American online provider of aftermarket auto parts, including crash parts, engine parts, performance parts and accessories.
Roth Capital analyst Darren Aftahi raised his price target on CarParts.com, Inc. (NASDAQ:PRTS) to $9 from $7.50 in early December, maintaining a buy rating on the stock. Analysts named the company a “top pick” in the company’s coverage universe for next year, citing a combination of “cost control and optimization that allows for further margin expansion while maintaining double-digit revenue growth.” Aftahi said risk and reward were favorable, noting that the company is a low-cost supplier in a weak macro environment.
Among the hedge funds tracked by Insider Monkey, J. Carlo Cannell’s Cannell Capital is the largest shareholder in CarParts.com, Inc. (NASDAQ:PRTS), with 3.01 million shares valued at over $15.59 million. I own Overall, 22 hedge funds were bullish on CarParts.com, Inc. (NASDAQ:PRTS) at the end of Q3 2022.
9. Arvinas, Inc. (NASDAQ:ARVN)
Number of hedge fund holders: 22
Arvinas, Inc. (NASDAQ:ARVN) is a clinical-stage biotechnology company committed to the discovery, development and commercialization of therapeutics that degrade disease-causing proteins.
On January 12, Capital One analyst Zegbe Jarrah maintained his Overweight rating and $88 price target on Arbinus (NASDAQ:ARVN) stock. Analysts believe the market assumes there is “no way forward” for ARV-471 and palbociclib following Albinas’ recent announcement of a delayed start to its Phase 3 combination trial. Jarrah thinks it might not be. Even if this were true, the current market capitalization of ARV-471 as a monotherapy and add-on combination as well as the company’s pipeline We also underestimate the potential of the line. Analysts believe the recent decline is a buying opportunity for investors.
Twenty-two hedge funds are bullish on Arvinas, Inc. (NASDAQ:ARVN) as of the end of the third quarter of 2022, compared with 21 funds at $374.5 million last quarter, according to Insider Monkey data. total investment was $445.8 million. David Witzke and Michael Gregory’s Avidity Partners Management are the largest position holders in the company, with 4.3 million shares in him worth $193.2 million.
8. Fate Therapeutics (NASDAQ:FATE)
Number of hedge fund holders: 28
Fate Therapeutics, Inc. (NASDAQ:FATE) is a clinical-stage biopharmaceutical company that develops cell therapies for the treatment of cancer and other diseases.
Citi analyst Yigal Nochomovitz lowered his price target on Fate Therapeutics (NASDAQ:FATE) to $9 from $80, maintaining a buy rating on the stock on Jan. 8. Analysts believe the damage is largely complete and there is an opportunity for value-based long-term investors to intervene. Nochomovitz believes biotechnology “in many ways remains his market for bargain hunters, and FATE now fits very well into that framework.”
Twenty-eight hedge funds remained bullish on Fate Therapeutics, Inc. (NASDAQ:FATE) at the end of the third quarter, according to Insider Monkey’s database. red mile group held the largest stake in the company at the end of the third quarter.
7. SomaLogic, Inc. (NASDAQ:SLGCMore)
Number of hedge fund holders: 29
SomaLogic, Inc. (NASDAQ:SLGC) is a protein biomarker discovery and clinical diagnostics company that will go public on the Nasdaq in September 2021 through a merger with special purpose acquisition company CM Life Sciences II, Inc. bottom. Earlier this month, shares of SomaLogic, Inc. (NASDAQ:SLGC) said the company expects its 2022 preliminary earnings to hit the high end of its forecast of $93 million to $98 million. After the announcement, it skyrocketed.
On January 9, SomaLogic, Inc. (NASDAQ:SLGC) signed an agreement with Group 42 Healthcare to use SomaLogic as the exclusive proteomics provider for world-class research and healthcare initiatives, extending the company’s reach in international markets. Expanded. The deal spans the United Arab Emirates, the Kingdom of Saudi Arabia and the wider MENA region and is subject to a comprehensive review of proteomics providers.
A total of 29 hedge funds tracked by Insider Monkey had stakes in SomaLogic, Inc. (NASDAQ:SLGC) at the end of the third quarter. The total value of these bets was $145 million. Eli Casdin’s Casdin Capital is the company’s largest shareholder as of Q3 2022, with an equity stake of $36.55 million.
6. Rocket Pharmaceuticals (NASDAQ:RCKT)
Number of hedge fund holders: 29
Rocket Pharmaceuticals (NASDAQ:RCKT) is an emerging clinical-stage biotechnology company focused on developing first-in-class gene therapy options for untreated rare diseases. The company also plans to acquire Renovacor by the end of Q1 2023, adding to its pipeline additional his AAV gene therapies, specifically his AAV targeting BAG3-associated dilated cardiomyopathy. . Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT) had $306.5 million in cash, cash equivalents, and investments as of September 30, 2022, according to 10-Q SEC filings.
William Blair analyst Raju Prasad said on Dec. 12 that Rocket Pharmaceuticals, Inc. (NASDAQ:RCKT) released an update on its Phase 1 closing meeting with the FDA on RP-A501, Dannon’s disease program. I was. Analysts said the discussions with the FDA were largely unanimous and appeared to be in line with FDA expectations. Prasad believes the FDA’s commentary on the debate provides a positive outlook for future design submissions for a pivotal trial in Danon’s disease, and maintains an outperform rating for the company’s stock.
Lee Ainslie’s Maverick Capital is the company’s largest shareholder as of Q3 2022, with a stake worth approximately $40.4 million. Overall, Rocket Pharmaceuticals (NASDAQ:RCKT) is owned by 29 hedge funds as of the end of his third quarter of 2022, giving him more than $231.8 million in cumulative equity.
Rocket Pharmaceuticals (NASDAQ:RCKT) ranks as a small-cap, along with Algoma Steel Group (NASDAQ:ASTL), Merus NV (NASDAQ:MRUS) and Magnachip Semiconductor Corporation (NYSE:MX). Investors are watching today.
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disclosure. none. 12 cash-rich small-cap stocks to invest in was first published on Insider Monkey.
