Small-cap stocks have performed very poorly in 2021 relative to the major indexes. There was some strong speculative action that topped out in February, and many of the small names have been in bear markets and steady downtrends for months.
The good news is that this action has created some great opportunities, and sooner or later, the market will eventually discover these bargains and reward astute stock pickers. Here are some names to watch:
* AirSculpt Technologies (AIRS) provides so-called custom body contouring that reduces fat via a non-invasive procedure. It operates a network of spa-like centers called Elite Body Sculpture. The stock went public via an initial public offering in October at $11. Four analysts have bought on the stock with an average target price of $20.75.
The stock has performed very well recently, and I will be looking for additional entries on pullbacks.
* Trio-Tech (TRT) provides third-party semiconductor and burn-in services. There is no analyst coverage of this name, but the market is starting to become aware of the growing demand among electric vehicle manufacturers for its services. The company announced a joint venture in China in December. In its most recent quarter, revenues were up 49%, and earnings jumped to $0.23 from a loss in the prior year.
* Elys Game Technology (ELYS) is a small gambling-focused stock I've followed for a while. It has betting operations in Italy that are doing well, but the story here is that ELYS offers the infrastructure that allows small operators such as restaurants or hotels to offer sports betting services. The company started operating in Washington in September in one location and recently entered into a joint venture in Atlantic City. ELYS is now actively marketing its betting infrastructure. Insiders have been buyers of the stock recently and hope to announce more contract news soon.
* Ondas Holdings (ONDS) operates in two areas. It is developing a new communication system to be used by railroads. The company is partnered with Siemens, is working hard on development, and there is likely to be contract news soon. The company also acquired American Robotics earlier this year, which develops drones for a variety of industrial uses. These drones operate beyond the visual line of sight and without a human operator on site. Industries such as railroads will use them for a variety of functions. The stock has been languishing as it awaits news that should come sometime in the first half of the year
* Li-Cycle Holdings (LICY) is a name that went public via a special purpose acquisition company that is engaged in battery recycling. With the advent of electric vehicles, the supply of lithium-ion batteries is growing exponentially. Li-Cycle's Spoke facilities take end-of-life batteries and battery scrap and produce "black mass," which contains valuable metals such as nickel, cobalt, and lithium. This is turned into battery-grade materials to be returned back to the lithium-ion battery supply chain. LI-Cycle is building a commercial hub in New York and is benefiting from Green Energy Initiatives. Three analysts have to buy ratings on the stock with an average price target of $16.67.
All of these stocks trade thin and can be quite volatile. Small caps have been out of favor, but at some point in 2022, it is likely that these smaller names with strong fundamentals will be discovered.
I will have five more names tomorrow.
Please note that due to factors including low market capitalization and/or insufficient public float, we consider some of these stocks to be small-cap or micro-cap stocks. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.