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In the past 12 months, small cap stocks did not perform well. All in all, the S&P SmallCap 600 lost 9% of its value (for the sake of comparison, the S&P 500 was able to climb by 10%). Microcaps have encountered greater difficulties and declined by 22%.
True, as data shows, small stocks tend to be volatile, but they have their merits. They are relatively cheap to buy, and they have great potential for growth. The following three stocks shouldn’t be left unnoticed by investors as they provide excellent opportunities for future returns.
Upwork – A New Concept of Work
Most people today follow a conventional work pattern. They wake up early in the morning, commute to work and return home in the evening. Upwork (NASDAQ:UPWK) strives to change that. It has built an online platform where freelancers working from home at their own free time offer their services to individuals or companies seeking different types of products from content and programming to financial or legal counseling.
This new type of flexible work, referred to as the "gig economy", is still in its infancy in the United States with a market cap of a little more than $1.5 billion, but it is expected to rise exponentially in the future. Upwork is leading the way.
Since is public debut in the autumn of 2018, Upwork stock lost 25% of its value. As alarming as this may sound, the stock has great potential. So far, Upwork has not been profitable, but there is room for optimism. In 2019 Q1, its revenue went higher by 16% year over year to $68.9 million.
The analysts show the company’s stock ungrudging courtesy. On June 26, Brent Hill from Jefferies upgraded it from hold to buy with a price target of $23 from real price value of $15. Average analysts’ price target stands at $22.75 (43% upside ). This positive assessment is derived from Upwork’s growth potential in the freelance market.
HEXO – Cannabis for Fun and Healing
HEXO Corp (TSE:HEXO) is a Canadian company that produces and distributes cannabis for medical and recreational uses in the Canada. It deploys innovative cannabinoid isolation technology with its 1.8 million sq. ft of facilities located in Quebec, Ontario and Greece (indicating the company’s intentions to penetrate the Eurozone).
HEXO’s production stood at 9,804 kilos in Q1 2019, nearly 100% higher quarter over quarter. Production forecast for fiscal 2020 issued by the company’s management revolves around 150,000 kilos, which is expected to increase annual revenues from approximately C$64 million at present to a whopping $400 million.