7 Best-Performing Small-Cap Stocks for October 2024
Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.
Investors salivate over the biggest companies in the market — the likes of Apple, Google and Amazon — but where’s the love for the market’s perpetual underdogs: small-cap stocks?
When these investments do get some time in the limelight, it’s often for unflattering reasons — violent price swings or fraudulent activity, for example. Small caps can diversify portfolios and bring higher growth potential — albeit with higher risks.
What are small-cap stocks?
Small-cap stocks are company shares with market values between $250 million and $2 billion, though that range isn't universal . "Cap" is shorthand for market capitalization, or the total number of a company’s shares multiplied by its current stock price.
The definition of small when it comes to stocks is subjective. The Russell 2000 Index, the first benchmark of small-cap stocks, is the best-known gauge. The market caps of its member companies currently range from about $240 million to $6 billion. The other major indexes tracking these stocks — the Standard & Poor’s SmallCap 600 and the MSCI USA Small Cap Index — include U.S. companies with even broader ranges of market caps.
Best small-cap stocks, ordered by one-year performance
Below is a table of the seven best-performing stocks that are listed on major U.S. exchanges and have a market cap under $10 billion, ordered by one-year returns.
Ticker | Company | Performance (Year) |
---|---|---|
WGS | GeneDx Holdings Corp | 1201.93% |
SEZL | Sezzle Inc. | 1144.43% |
LBPH | Longboard Pharmaceuticals Inc | 657.08% |
RNA | Avidity Biosciences Inc | 654.40% |
NISN | NiSun International Enterprise Development Group Co Ltd | 622.94% |
BYRN | Byrna Technologies Inc | 620.95% |
FTEL | Fitell Corp | 612.92% |
Source: Finviz. Data is current as of Oct. 3, 2024, and is intended for informational purposes only, not for trading purposes.
Small caps historically have a relatively high correlation — meaning they tend to move in lockstep — with large-cap stocks. But which group is performing better than the other over a given time frame fluctuates regularly, based on factors such as macroeconomic growth and politics.
Why small-cap stocks are risky
As small-cap businesses expand, their stocks offer a higher growth potential compared with larger companies. But that comes with a greater risk of volatility — including more (and bigger) fluctuations in stock prices and earnings reports. This trade-off is known as the risk premium.
Small-cap stocks can also be more fertile territory for fraudulent activity.
Why small-cap stocks are mighty
The sheer number of small-cap stocks means there’s a plethora of options for investing in them. What’s more, the proliferation of exchange-traded funds has made it easier to buy a basket of stocks with a specific investing strategy — growth or value, for example. Small caps can be an underappreciated — or even overlooked — way to add diversification to your portfolio.
» MORE: Small-cap ETFs
Why small-cap stocks are not that different
It’s important to know what makes small-cap stocks distinctive, but you shouldn’t necessarily obsess over the differences. They have a lot in common with the others that might be in your portfolio: They trade on exchanges, their prices are published intraday, Wall Street analysts write research reports about them, and by virtue of being public, these companies must disclose a wealth of information to investors.
More on stock investing
On a similar note...