Forbes Advisor has put together a list of 10 promising small-cap stocks as of July 2024. All of the companies are profit-making, with their earnings expected to continue growing. They are financially healthy, and in some cases are trading at an extraordinary value.
Details
Forbes Advisor compiled the list of top 10 stocks trading above $2 per share based on earnings per share (EPS) over the last five years and expected EPS growth for the next two years. Companies issuing shares excessively or with unstable earnings were filtered out.
ACM Research, with a market capitalization of $1.46 billion, produces cleaning equipment for semiconductor manufacturers that removes impurities and particles from microchips. Forbes Advisor points out that over the last five years, its EPS grew at an average annual rate of 67.8%, while EPS is forecast to increase 6.0% and 13.6% in 2024 and 2025, respectively. ACM has outperformed the S&P 500 index, comprising the 500 largest companies, by an annual average of 8.6 percentage points over the last five years.
Titan Machinery, with a market capitalization of $348.66 million, operates construction and agricultural equipment stores. Its EPS has risen at an average annual rate of 69.5% — the highest among all 10 companies, notes Forbes Advisor. Analysts expect EPS to grow 8.4% this year but decline 6.3% in 2025. Titan has outperformed the S&P 500 by an annual average of 4.7 percentage points over the last five years.
Stride, with a market capitalization of $2.92 billion, is an online education company, providing alternatives to in-class schooling. Over the last five years, its EPS has grown at an average annual rate of 30.8%, with growth forecast at 12.3% in 2024 and 9.2% in 2025. Stride shares have outperformed the S&P 500 by an annual average of 7.5 percentage points in the last five years.
Digi International, with a market capitalization of $827.5 million, specializes in wireless communication solutions. Its EPS has grown 60.6% per year over the last five years, with expected growth of 16.9% in 2024 and 16.5% in 2025. Digi’s shares have outperformed the S&P 500 by an annual average of 9.9 percentage points over the last five years.
The Bancorp, with a market capitalization of $2 billion, provides banking products and services in the U.S. Over the last five years, its EPS has increased at an average annual rate of 61.6%, while analysts see EPS growth at 60.4% and 14.3% in 2024 and 2025, respectively. The Bancorp stock has beaten the S&P 500 by an average of 19.8 percentage points per year for the last five years.
Hess Midstream, with a market capitalization of $8.7 billion, is a company focused, as its name suggests, on the oil and gas midstream, operating in three segments: production, processing and storage, and export. Its EPS grew at an average annual rate of 11.2% over the last five years, with EPS growth forecast at 6.5% this year and 17.3% in 2025. Over the last five years, its shares have outperformed the S&P 500 by an annual average of 3.4 percentage points.
Sterling Infrastructure, with a market capitalization of nearly $3.5 billion, specializes in civil infrastructure construction, from homes and bridges to airports. The company saw its EPS rise an average of 33.1% annually over the last five years. Analysts expect EPS growth of 1.1% in 2024 and 16.8% in 2025. Sterling shares have outperformed the S&P 500 by 24 percentage points per year — the widest margin among all companies on the list.
First Financial Bancorp, with a market capitalization of $2 billion, is a regional bank. Over the last five years, average annual EPS growth was 9.8%, while EPS is expected to climb 18.7% in 2024 before decreasing 15.0% in 2025. First Financial shares have lagged the S&P 500 by an average of 13.4 percentage points over the last five years.
OFG Bancorp, with a market capitalization of $1.7 billion, provides banking and financial services in Puerto Rico and the U.S. Virgin Islands. Its EPS has risen at an average annual rate of 30.5% over the last five years. In the current year, EPS is expected to increase 8.7% but then decrease 0.5% in 2025, according to analysts. In the last-five-year period, OFG has beaten the S&P 500 by an annual average of 5.0 percentage points.
NMI Holdings, with a market capitalization of $1.7 billion, is a mortgage insurer. Its EPS has advanced 32.1% annually over the last five years. Analysts forecast EPS growth of 2.7% this year and 12.6% next year. NMI shares have lagged the S&P 500 by an annual average of 6.1 percentage points over the last five years.
Methodology
When considering companies for the list, Forbes Advisor took into account several criteria. Each company must:
- have expected average annual EPS growth of at least 7% over the next five years;
- have EPS growth in the current year;
- have EPS and sales growth over the last five years;
- be profitable in the last three years.
