Best performing small cap stocks of 2022

Are you looking to invest in small cap stocks? Small cap stocks offer potential for higher growth than large cap stocks and can be a great addition to any portfolio. With careful research and due diligence, investors can identify the best performing small cap stocks for 2022. In this article, we’ll discuss the definition of small cap stocks, factors to consider when selecting the best performing stocks, and the risks associated with investing in small cap stocks.

●    Definition of small cap stocks

Small cap stocks refer to stocks of companies with a market capitalization of $300 million to $2 billion. This definition can vary depending on the market cap index you are looking at. Small cap stocks are generally more volatile and less liquid than large cap stocks. They can also have a higher potential for growth than large cap stocks due to their smaller size, allowing them to respond more quickly to changes in the market and capitalize on opportunities.

Investors often view small cap stocks as higher risk investments due to their volatile nature. However, with careful research and due diligence, investors can identify the best performing small cap stocks for the upcoming year.

●    Potential for higher growth compared to large cap stocks

Small cap stocks often offer higher potential for growth than large cap stocks, as these stocks are generally smaller and less established. This means that these stocks may respond more quickly to changes in the market or industry, allowing them to capitalize on any opportunities.

Additionally, small cap stocks may be less expensive than large cap stocks, making them attractive investments for investors looking to maximize their potential returns.

Small cap stocks also tend to have higher dividend yields than large cap stocks. This makes them attractive investments for income investors, as they are able to generate higher returns on their investments.

II. Factors to consider when selecting best performing small cap stocks

When selecting the best performing small cap stocks for 2022, it is important to consider a variety of factors. These factors include the financial health and stability of the company, the management team and leadership, and the industry outlook and market trends.

●    Financial health and stability

The financial health and stability of the company is an important factor to consider when selecting the best performing small cap stocks for 2022. Investors should look for companies that have strong balance sheets and healthy cash flows. Additionally, investors should look for companies that have a track record of consistently meeting or exceeding their financial targets, as this indicates the company is able to generate consistent returns for its investors.

●    Management team and leadership

The management team and leadership of the company is also an important factor to consider when selecting the best performing small cap stocks for 2022. Investors should look for companies with experienced and knowledgeable management teams that have a track record of success. Additionally, investors should look for companies with strong leadership that is able to effectively guide the company through times of uncertainty and market volatility.

●    Market trends and industry outlook

The market trends and industry outlook are also important factors to consider when selecting the best performing small cap stocks for 2022. Investors should look for companies that are well-positioned to capitalize on any market trends or industry shifts, as this can help the company generate higher returns for its investors. Additionally, investors should look for companies that have a competitive advantage in their industry, as this can help the company outperform its competitors and generate higher returns for its investors.

III. Best performing small cap stocks for 2022

Nine Energy Service, Inc. (NINE)

2022 Price Performance: 1220%

Market Cap: 482.7 Million

Nine Energy Service, Inc. (NINE), an onshore completion services provider, currently trading at a price of $14.53. Recently NINE got an “Strong Buy” rating from Zacks that makes it even more attractive investment option. NINE is approaching profitability with increased profit margin of 25.7%.

Mammoth Energy Services, Inc. (TUSK)

2022 Price Performance: 375.27%

Market Cap: 398.42 Million

Mammoth Energy Services, Inc. (TUSK), an energy service company, has made its way to the best performers of 2022. TUSK is currently trading at a price of $8.65. Furthermore, analysts set a price target of $10.50 on the stock. In the past year, company’s revenue grew 23.22%.

Ardmore Shipping Corporation (ASC)

2022 Price Performance: 326.33%

Market Cap: 569.77 Million

Ardmore Shipping Corporation (ASC), transports chemical and petroleum materials around the world, currently trading at $14.41. Stock has received a price target of $16.25 for the year, making it a better option for your portfolio. If we look at the financials, the company’s profit margin surged +47.1% (20.1%) as compared to last year’s profit margin of -27%.

Target Hospitality Corp. (TH)

2022 Price Performance: 325.28%

Market Cap: 4.28 billion

Target Hospitality Corp. (TH), a rental and hospitality company, trading with a share price of $15.14; with a future price target of $20.67. Moreover, the company’s financials show that its profit margin increased +16.9%, making it to 10.5% as compared to last year’s margin of -6.4%.

Hallador Energy Company (HNRG)

2022 Price Performance: 314.52%

Market Cap: 330.77 Million

Hallador Energy Company (HNRG) produces steam coal for the Indiana state-based electric power generation business. Currently, HNRG has a share price of $9.99. Hallador Energy Company (HNRG) should also be on your watch list while making your portfolio as it has made its way to the best performers of 2022. On the other hand, HNRG’s revenue is increasing 11.14% as compared to the last 5 year compound annual rate of 0.14%. 

IV. Risks of investing in small cap stocks

It is important for investors to understand the risks associated with investing in small cap stocks. These risks include higher volatility, the risk of loss, limited trading volume and liquidity, and the potential for the company to fail.

●    Higher volatility and risk of loss

Small cap stocks are generally more volatile than large cap stocks, meaning their prices can fluctuate more dramatically. This can lead to higher potential returns, but it also increases the risk of the investor losing money on their investment. Investors should be aware of this risk and be prepared to accept the potential for losses.

●    Limited trading volume and liquidity

Small cap stocks often have limited trading volume and liquidity. This means that there may be fewer buyers and sellers in the market, making it more difficult to sell the stock at the desired price. Additionally, the limited liquidity can make it difficult for the investor to exit the position if the stock does not perform as expected.

VI. Conclusion

In conclusion, small cap stocks can offer potential for high growth, especially when compared to large cap stocks. However, it is important for investors to be aware of the risks associated with investing in small cap stocks. Careful research and due diligence is important before investing, and investors should also diversify their portfolios to manage any risk.

●    Small cap stocks can offer potential for high growth

Small cap stocks can be a great addition to any portfolio, as they offer potential for higher growth than large cap stocks. These stocks may respond more quickly to changes in the market or industry, allowing them to capitalize on any opportunities. Additionally, small cap stocks may be less expensive than large cap stocks, making them attractive investments for investors looking to maximize their potential returns.

●    Careful research and due diligence is important before investing

It is important for investors to do their research and due diligence before investing in small cap stocks. Investors should consider the financial health and stability of the company, the management team and leadership, and the industry outlook and market trends. Additionally, investors should be aware of the risks associated with investing in small cap stocks, such as higher volatility, the risk of loss, limited trading volume and liquidity, and the potential for the company to fail.

●    Diversification is key to managing risk in any investment portfolio

 No matter what type of investments you make, diversification is key to managing risk. Diversifying your portfolio can help reduce your exposure to any one particular stock or sector, allowing you to manage your risk and maximize your potential returns.

Investors looking to invest in small cap stocks should do their research and due diligence before making any investment decisions. With careful research and due diligence, investors can identify the best performing small cap stocks for 2022 and add them to their portfolios.

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