As many know, the volatile nature of small-caps can sometimes turn investors away.
However, many small-cap stocks turn out to be big winners in the long run, and they typically have less analyst coverage, providing investors an opportunity to get in "early" before the crowd.
For those seeking exposure to small-caps, three stocks – 8x8 EGHT, Horizon Technology Finance HRZN, and JAKKS Pacific JAKK – could all be considered.
All three sport a favorable Zacks Rank, indicating optimism among analysts. Let’s take a closer look at each.
8x8
8x8 is the provider of the world's first Communications Cloud that combines unified communications, team collaboration interoperability, contact center, and real-time analytics in a single open platform. The stock is a Zacks Rank #1 (Strong Buy), with the revisions trend notably positive for its current fiscal year.
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The company’s earnings are forecasted to see a notable recovery in its current fiscal year, with the Zacks Consensus EPS Estimate of $0.46 40% higher year-over-year.
Horizon Technology Finance
Horizon Technology Finance makes secured loans to development-stage companies in the technology, life science, healthcare information and services, and cleantech industries. The stock is a Zacks Rank #1 (Strong Buy), with earnings expectations increasing across the board.
Image Source: Zacks Investment Research
It’s hard to ignore the company’s dividend metrics, with shares currently yielding a sizable 10% annually. Dividend growth is there, too, with the payout growing by a modest 1.5% over the last five years.
Image Source: Zacks Investment Research
The company’s earnings are forecasted to climb 36% in its current year on 43% higher sales.
JAKKS Pacific
JAKKS Pacific is a multi-brand company that has been designing and marketing a broad range of toys and consumer products since 1995. The stock is a Zacks Rank #1 (Strong Buy), with earnings expectations jumping across all timeframes.
Image Source: Zacks Investment Research
The company has been a stellar earnings performer, exceeding the Zacks Consensus EPS Estimate by an average of 62% across its last four releases. Just in its latest print, JAKK posted a 37% EPS beat and reported revenue 9% ahead of expectations, with both items well higher than year-ago figures.
Bottom Line
Small-cap stocks could be solid considerations for those who can handle a higher level of volatility and have a less conservative approach.
While their price swings can undoubtedly become spooky, their growth potential is impressive.
And all three above – 8x8 EGHT, Horizon Technology Finance HRZN, and JAKKS Pacific JAKK – boast strong growth trajectories paired with improved earnings outlooks.
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Horizon Technology Finance Corporation (HRZN) : Free Stock Analysis Report
8x8 Inc (EGHT) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
