7 Best-Performing Small-Cap Stocks for March 2024

Small-cap stocks can bring diversification and higher growth potential — albeit with higher risks — to a portfolio. Here's what to know before investing.
Anna-Louise Jackson
By Anna-Louise Jackson 
Updated
Edited by Robert Beaupre
Understanding Small-Cap Stocks

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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.

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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)

SLNO

Soleno Therapeutics Inc

1941.08%

CRBP

Corbus Pharmaceuticals Holdings Inc

1150.00%

CVNA

Carvana Co.

831.09%

EYPT

EyePoint Pharmaceuticals Inc

783.28%

ALAR

Alarum Technologies Ltd ADR

778.05%

ROOT

Root Inc

699.80%

GCT

GigaCloud Technology Inc

689.20%

Source: Finviz. Stock data is current as of March 1, 2024, and is intended for informational purposes only.

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.

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.

Ready to go small? See NerdWallet’s tool to find the best stock broker for your needs.

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