Small-cap growth stocks with 1,000% upside potential is our topic for today. They are usually young companies with a market capitalization (cap) between $300 million and $2 billion.
These names are typically more sensitive to sales and margin concerns during inflationary periods. After all, they have fewer resources to cope with rising costs than their larger-cap peers. As a result, they have come under significant pressure since January.
For instance, the Russell 2000 index has fallen 20% year-to-date (YTD), while the Russell Top 200 Growth index has lost 25%, both faring worse than the benchmark S&P 500‘s 17.5% decline in 2022. Yet, small-cap growth stock valuations now offer compelling buying opportunities.
Meanwhile, the NFIB Small Business OptimismIndex is currently down 3.6 points in June to 89.5, marking its sixth consecutive month lower than the 48-year average of 98. However, as soon as the gloomy market sentiment dissipates, small-cap stocks are expected to be among the biggest outperformers as they tend to lead the broad market when investor sentiment turns bullish.
Image of the Axcelis (ACLS) logo on a web browser amplified through the lens of a magnifying glass
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52-week range: $34.90 – $83.73
Axcelis Technologies (NASDAQ:ACLS) designs ion implantation and other processing equipment to some of the largest chip makers. Its Purion family of ion implanters are used in various semiconductor fabrication processes.
This small-cap semiconductor play announced Q1 results on May 4. Revenue came in at $203.6 million, down from $205.7 million in the prior quarter. However, net income for the quarter surged to $1.22 per diluted share, up from $1.05 in the fourth quarter. Cash and equivalents ended the period at $297.9 million.
Order backlog has reached its highest on record. Management says it’s on track to generate $850 million in revenue during 2022, a full year ahead of schedule.
ACLS stock has declined more than 17% YTD yet has gained 77% over the past year. Shares are changing hands at just 3 times sales. Meanwhile, analysts’ 12-month median price target stands at $80.
Axsome Therapeutics (AXSM)
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52-week range: $19.38 – $54.30
Clinical-stage biopharma play Axsome Therapeutics (NASDAQ:AXSM) focuses primarily on developing novel therapies for managing central nervous system disorders for which only limited treatment options exist.
Axsome releasedQ1 results on May 2. Net loss widened to $1.03 per share, compared to a net loss of 78 cents per share, for the prior-year quarter. Cash and equivalents ended the period at $84.7 million.
Its leading program, AXS-05, is a potential treatment for significant depressive disorder. Axsome has recently received proposed labeling from the Food and Drug Administration (FDA) for AXS-05, implying that AXS-05 could soon have the green light for sale and marketing as a new antidepressant.
The pharma name also boasts other promising late-stage programs in its pipeline, including treatments for migraines and Alzheimer’s disease agitation, as well as potential narcolepsy treatment AXS-12 and fibromyalgia therapy AXS-14.
AXSM stock is trading flat for the year yet has fallen almost 30% over the past 12 months. Wall Street’s 12-month median price target is at $64.
Global Blood Therapeutics (GBT)
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52-week range: $21.65 – $40.69
Global Blood Therapeutics (NASDAQ:GBT) specializes in developing novel therapeutics against blood-based disorders. Management reported Q1 results on May 4.
Revenue came in at $55.2 million, up from $39 million in the previous year. Net loss was $1.26 per diluted share, up from $1.21 a year ago. Cash and equivalents totaled $662.1 million at the end of the period.
In December, the company’s oral treatment for sickle cell disease (or SCD), Oxbryta, gained regulatory approval for patient use. The company recently launched a phase 2/3 clinical trial for GBT601, the biotech’s fourth ongoing late-stage SCD therapy project. SCD impacts more than 100,000 people in the U.S. alone.
GBT stock has appreciated almost 10% since the beginning of the year. Shares are changing hands at 10.2 times sales. Meanwhile, analysts’ 12-month median price target stands at $62.50.
GoPro (GPRO)
image of a white GoPro (GPRO) branded camera
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52-week range: $5.25 – $12.14
GoPro (NASDAQ:GPRO) is the global leader in action camera technology. The company boasts a prominent brand name as an innovative action camera maker.
Management put outQ1 metrics on May 5. Revenue soared 6% YOY to $217 million. Adjusted net income soared 200% YOY to 0.09 cents per diluted share, up from 0.03 cents in the prior-year period. Cash and equivalents ended the quarter at $305 million.
GoPro has created new revenue streams through its subscription offerings. A steadily increasing number of customers are using the cloud storage service and the Quik editing app. As a result, subscription revenue jumped 73% YOY in Q1 to $19 million, while the subscriber base grew 85% YOY to 1.74 million people.
So far in 2022, GPRO stock has lost 45%. Shares look like a bargain at just 6 times forward earnings and 0.9 times sales. Wall Street’s 12-month median price target is at $11.
Health Catalyst (HCAT)
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52-week range: $11.25 – $59.50
Health Catalyst (NASDAQ:HCAT) provides data and analytics technology and services to healthcare organizations. Its cloud-based data platform, along with analytics software and other professional services, are designed to help hospitals and other healthcare organizations improve patient outcomes.
The tech name announced Q1 results on May 10. Total revenue grew 22% YOY to $68.1 million. Adjusted net loss remained flat YOY at 0.06 cents per diluted share. Cash and equivalents ended the period at $198.4 million.
In May, Health Catalyst acquired ARMUS, a Silicon Valley-based clinical registry development and data management technology company. This acquisition will drive tangible financial savings in addressing the unique data registry, reporting, and data abstraction needs of healthcare organizations.
Health Catalyst also announced a partnership with MemorialCare Miller Children’s & Women’s Hospital Long Beach. They will collaborate to improve care outcomes with Innovative Patient Engagement technology. Investors will be looking at how Health Catalyst can extend its outreach further.
HCAT stock has tumbled more than 60% YTD. Shares are trading at just 3.2 times sales. Meanwhile, analysts’ 12-month median price target stands at $23.50.
Skillz (SKLZ)
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52-week range: $1.15 – $15.74
Mobile eSports platform Skillz (NYSE:SKLZ) allows players to wager on the outcome of the games played on its platform. In addition, it hosts live eSports events and encourages third-party developers to create gaming content via revenue sharing.
Skillz released Q1 results on May 4. Revenue grew 12% YOY to $93.4 million. Net loss widened to 37 cents per diluted share, up from 16 cents a year ago. Cash and equivalents ended the period at $117.5 million.
Investors noted the company spent $117.3 million on sales and marketing, more than the revenue it generated during the quarter. Meanwhile, monthly active users (MAU) increased 18.5% to 3.2 million.
SKLZ stock has tanked more than 80% YTD. As a result, shares are trading at a bargain 1.5 times sales. Wall Street’s 12-month median price target is at $3.
Veru (VERU)
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52-week range: $4.34 – $18.40
Biopharma group Veru (NASDAQ:VERU) focuses primarily on urology and oncology. It develops prescription products for benign prostatic hyperplasia hot flashes associated with cancer treatment, male infertility, and novel chemotherapies for various cancer types.
Veru reported Q2 FY22 results on May 12. Revenue declined 2% YOY to $13 million. Net loss came in at 18 cents per share, compared with a loss of 0.04 cents a year ago. Cash and equivalents ended the period at $112 million.
The company has recently published strong positive results from its phase 3 trial of sabizabulin, an antiviral and anti-inflammatory drug for treating severe cases of Covid-19. As a result of the “overwhelming efficacy” that halved the risk of death among patients, Veru is seeking an Emergency Use Authorization (EUA) for sabizabulin from the FDA. Understandably, Veru investors are excited about the possibility of getting an EUA.
VERU stock has skyrocketed 100% YTD. Shares are trading at 19.5 times sales. Meanwhile, analysts’ 12-month median price target stands at $31.
On the date of publication, Tezcan Gecgil, Ph.D., did not have (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.
