Simply Wall St spotlights three small stocks with ‘strong potential’

United States Lime & Minerals, one of the stocks, has demonstrated financial health with no debt, says Simply Wall St / Photo: Shutterstock

This summer has been tumultuous for investors, marked by a rotation out of big tech and into other sectors and small-cap stocks, as well as the more recent global stock market selloff. In this dynamic environment, stocks with strong fundamentals and growth potential can “uncover hidden opportunities for investors,” writes Simply Wall St. Their team has found three “undiscovered gems” in the market.

Sezzle

This fintech company, with a market capitalization of $730.7 million, provides payment solutions for online and offline retailers, as well as services for end customers, such as virtual cards and BNPL (buy now, pay later).

Since the beginning of the year, Sezzle stock has soared close to 536%. The company’s revenue rose 60% in the second quarter of 2024 to $56 million, while net profit was 2,500% higher at $29.7 million, according to the earnings presentation.

XPEL

The company, with a market capitalization of $1.2 billion, offers a range of automotive paint protection film, headlight protection film, automotive window tint, architectural flat glass film, and proprietary software.

Over the last five years, XPEL’s revenue has grown at a CAGR of 32.2%, while net profit was up more than 10% year over year in the second quarter of 2024, according to the company’s investor presentation. For the year to date, its shares have retreated about 20% to $43.26 per share. This compares with an average target price of $55.00 per share from the two analysts who track the company’s stock, according to MarketWatch.

United States Lime & Minerals

The company, with a $2.25 billion market capitalization, manufactures and supplies limestone and lime products. It has a strong financial position and no debt, notes Simply Wall St, while earnings growth has been in the double digits in recent years. In the second quarter of 2024, revenue came in 3.5% higher year over year at $76.5 million, with diluted earnings per share rising nearly 32% to $0.91, the company reported. At that time, it announced a dividend of $0.05 per share. Since the beginning of the year, USLM stock has gained almost 71%.