The stock market is extremely volatile, with multiple economic indicators signaling a weak economy. This includes an unprecedented decrease in consumer spending of 0.1%, combined with fears of rising interest rates and inflation staying above the 2% target. Regardless, there are undervalued small cap stocks. They might be the difference between your portfolio going green or red.

All three of the following are undervalued small cap stocks in sectors expanding quickly, which furthers the point of eventual growth.

Titan Machinery (TITN)

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Titan Machinery (NASDAQ:TITN) operates a network of agricultural and construction equipment stores internationally, through four segments. It also provides maintenance services for its products. TITN stock is currently trading at $17.85, down 37.74% year-to-date.

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While the company missed EPS projections last quarter and has lowered projections for 2025, it remains a good buy. This is because while the company is currently seeing stagnating growth, the overall industrial market is expected to grow at a CAGR of 5.7%, reaching a market cap of $51.98 billion.

TITN grows primarily through acquisitions. Due to this, it has a high debt-to-equity ratio. Combined with supply chain issues and rising costs, no wonder TITN is in a tight spot, financially. However, please note that these are short-term issues, and analysts are currently predicting an average growth potential of 54.62%, making it a great undervalued pick.

Oxford Lane Capital (OXLC)

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Oxford Lane Capital (NASDAQ:OXLC) is a close-ended fund that Oxford Lane Management launched and manages. The fund primarily invests in securitization vehicles. This, in turn, invests in senior secured loans to companies whose debt is rated below investment grade or is unrated.

OXLC stock has a market cap of $1.35 billion, and profit and operating margins of 76.64% and 71.74% respectively. It has seen year-on-year (YOY) quarterly revenue growth of 20.70%, which makes it a promising undervalued small-cap stock. Oxford Lane stock has a beta of 1.13, which indicates the stock is only 13% more volatile than the overall market while providing returns that outpace the market.

OXLC stock has seen many insiders buy it, indicating the company will grow. OXLC’s dividend yield and disciplined investment approach make it a compelling choice for an undervalued small-cap stock.

Fiverr (FVRR)

Fiverr (NYSE:FVRR) operates an online marketplace worldwide. Its platform enables sellers to sell their services and buyers to buy them. The company’s platform includes various categories in ten verticals including graphic and design, digital marketing, writing and translation, video and animation, music and audio, programming and tech, business, data, lifestyle and photography.

FVRR stock is currently trading at $24.47, with a market cap of $947.07 million. It has consistently beaten EPS predictions, surprising investors in Q4 2023 and Q1 2024 by 16.70% and 18.20% respectively. Fiverr has shown resilience with consistent revenue growth and expanding gross margins. It has seen YOY quarterly revenue growth of 6.30% and has a profit margin of 2.38%.

The company’s innovative approach to the gig economy and its focus on enhancing user experience have driven significant user engagement and retention. As Fiverr continues to innovate and capture market share in the gig economy, it remains a compelling investment as an undervalued small-cap stock.

On the date of publication, Achintya Pasricha did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Achintya Pasricha is a self-taught investor who has recently started to publish articles on a freelance basis.

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