7 Small-Cap Stocks that Wall Street Loves for Good Reason

Core Viewpoint - The small-cap Russell-2000 Index has shown a 5% increase in 2024 and a 21% increase over the past 12 months, indicating a potential catch-up to the broader market rally. This article highlights seven small-cap stocks favored by Wall Street, appealing to growth-oriented investors despite inherent risks associated with small-cap investments [1]. Group 1: Evolv Technologies (EVLV) - Evolv Technologies utilizes AI-based weapons detection technology to enhance safety and ease of movement, with its main product being the Evolv Express system [2]. - The company reported a 46% revenue growth in 2023, added around 300 new customers, and scanned over one billion visitors, resulting in an annual recurring revenue (ARR) of approximately $75 million, a 120% year-over-year increase [2]. - Analysts have set a price target of $7.08 for EVLV, indicating a potential growth of 59.18%, with a Strong Buy rating from all six analysts covering the stock [3]. Group 2: urban-gro (UGRO) - urban-gro is a consulting company focused on designing facilities for healthcare and controlled environment agriculture, including cannabis dispensaries [5]. - The company faced a disappointing earnings report in March, missing both revenue and earnings expectations, leading to a 24% drop in stock price [5]. - Despite this, analysts maintain a favorable outlook with a price target of $4.74 and a Strong Buy rating from all four analysts [6]. Group 3: ACM Research (ACMR) - ACM Research specializes in wafer packaging and cleaning for the semiconductor industry, benefiting from the ongoing chip sector super cycle [7]. - The stock has increased by 466% over the past five years but remains down about 35% from its all-time high in 2021, with a market cap of $1.6 billion [7]. - Analysts forecast a price target of $37.95 for ACMR, suggesting a potential growth of 30%, with a Strong Buy rating from all seven analysts [7]. Group 4: SoundHound AI (SOUN) - SoundHound AI focuses on generative AI solutions aimed at conversational AI, with clients in hospitals, data centers, and the automotive industry [9]. - The stock has risen by 194.5% in the last 12 months, with Nvidia recently investing in the company, indicating strong potential [9]. - Analysts have set a price target of $7.15 for SOUN, representing a 21% gain, with a Strong Buy rating from four out of seven analysts [9]. Group 5: Worthington Steel (WS) - Worthington Steel, a spin-off of Worthington Industries, specializes in processing carbon flat-rolled steel and electrical steel lamination [10]. - The company is positioned to benefit from increased iron ore demand in 2024 and the need for electrical steel in the electric vehicle sector [10]. - Currently, one out of two analysts gives WS a Strong Buy rating, indicating positive sentiment despite limited coverage [10]. Group 6: Structure Therapeutics (GPCR) - Structure Therapeutics is a clinical-stage biotech company with its lead candidate GSBR-1290 in Phase 2 trials for diabetes and obesity treatment [11][12]. - The company reported $467 million in cash at the end of 2023, sufficient to fund operations through 2026, aligning with potential commercialization of GSBR-1290 [12]. - Analysts have a price target of $81.17 for GPCR, suggesting an 86% gain, with a Strong Buy rating from all six analysts [12]. Group 7: Ero Copper (ECO) - Ero Copper is a high-margin clean copper producer in Brazil, with plans to double its copper production by 2025 [13]. - Analysts expect copper prices to rise significantly in the next two years as supply-demand dynamics shift [13]. - The consensus rating for ECO stock is Hold, but three out of eleven analysts have a Strong Buy rating [14].