Companies operating beneath the radar can often dodge most of the market turmoil. In addition, small-cap stocks are generally more domestic in origin, making them less susceptible to geopolitical shocks and foreign exchange movements that have recently derailed many global corporations. In addition to these benefits, small-cap stocks in the United States have typically beaten their larger-cap counterparts over the long term. The following nine corporations are some of the best small-cap stocks in 2023 and beyond.
1. Allied Motion
Allied Motion is a technology company focusing on controlled motion for various industries. Products and services like this have widespread use in fields as diverse as transportation, healthcare, aerospace, and defence. Allied Motion Technologies is headquartered in Amherst, New York, although it maintains offices worldwide, including in North and South America, Europe, and Asia.
The manufacturing stock is worth $394 million and generates $1.52 per share. The stock has risen from a 52-week low of $19 to $49.98. The dividend yield for Allied Motion Technologies is 0.12% each year. More than 20,613 shares are traded per day. In 2019, the firm raked in $371 million in revenue.
2. Pactiv Evergreen Inc.
Specialty packaging is Pactiv Evergreen's main business. It manufactures food and drink packaging, dinnerware, and containers. Despite being valued at only $2 billion on the stock market, the company pulls in $6 billion in annual revenue. The fact that shares are trading for only 0.3 times revenue indicates how unpopular the company has become. Given the poor profit margins and high levels of competition in the packaging industry, investors' indifference is partly understandable.
However, this has an excessively huge discount. Pactiv is trading at a modest six times earnings right now. The recent supply chain and inflationary difficulties should ease in 2023, which is good news for profitability. The firm has substantial debt but is using its substantial cash flow to reduce its debt gradually. Pactiv's stock price may rise as the company improves its financial standing. Meanwhile, investors can cash in on a solid 3.6% dividend yield.
3. Hovnanian Enterprises
Hovnanian Enterprises, Inc. is an American firm that specializes in building homes. Texas, Arizona, California, Virginia, Florida, Illinois, Ohio, and Pennsylvania are key markets for the company's single-family and multi-unit building construction services.
Hovnanian Enterprises develops neighbourhoods and properties for first-time, upgrade, and high-end homeowners. Historically, real estate transactions involving Texas, specifically Houston, Arizona, and California, are the most important revenue generators. In addition to providing mortgage services to its customers, the company also acquires and develops land for use in its building projects.
4. Diversey Holdings Ltd.
Diversey is a business that provides cleaning and hygiene solutions. Compared to Ecolab Inc. (ECL), the market leader, it is the second-largest company in the United States. Therein lays the potential profit for investors.
Ecolab is worth over $40 billion, and the stock trades at 33 times forward earnings. Currently, Diversey trades for less than 15 times the anticipated earnings, giving the company a roughly $2 billion valuation. There is, of course, a rationale for this. Private equity sold its stake in Diversey, and the company has since gone public.
It is doubted by some that Diversey can once again compete on the same level as Ecolab. However, the danger is already priced into Diversey shares, down more than 60% from its IPO in 2020. The company stands to gain as the hospitality industry, among Diversey's most important clients, continues to recover from the pandemic's effects.
5. IBEX
When it comes to helping businesses improve their customer acquisition, engagement, growth, and retention efforts, nobody does it better than IBEX (NASDAQ: IBEX), IBEX Holdings Ltd. There are two main divisions at IBEX: Customer Acquisition and Customer Management. The Customer Acquisition market serves companies that deal directly with the general public.
Customers are generally obtained in this division for businesses in the cable, technology, insurance, and telecommunications sectors. The solutions for interacting with and learning more about customers fall under the Customer Management umbrella. The customer engagement solutions package includes help desk services, technical assistance, and other value-added back office outsourcing. The United States is the primary source of revenue for the firm.
6. Delek US Holdings Inc.
Oil and refined products like gasoline and jet fuel are the main focus of Delek, an energy corporation specializing in refining, transporting, and distributing these products. Four refineries are under the company's management in the southern United States.
Delek also runs three biodiesel plants with an annual capacity of 40 million gallons. Due to its cyclical nature, the refining business is prone to large profit swings. Refining earnings are based on the spread between the price of oil and the price of heating oil, asphalt, gasoline, and other refined items. Therefore, their cycle can be quite different from that of crude oil.
Due to supply chain disruptions and increased demand for petroleum products, 2022 was a banner year for the refining industry. American oil production has increased, but profitability in the domestic refining industry should continue to rise. Shares of Delek average nine times profit projections.
