As attention turns to small cap stocks, we’ve used the TipRanks Stock Screener to narrow in on three small cap companies with unanimous Buy ratings from Wall Street. Small cap companies have market caps under $2B and can offer opportunity for growth, although they can experience higher levels of volatility. Today we are looking at three small cap stocks that not only have a Strong Buy consensus, but also score an Outperform rating on the TipRanks Smart Score, which looks at 8 unique factors and measures a stocks likelihood to outperform the overall market. Let’s take a closer look!
Spire Global (SPIR)
First, we have Spire Global, which is an analytics and data company, powered by satellites. They have approximately 100 nanosatellites placed in low-Earth orbit, providing global coverage. Capturing unique data, their services help customers across a variety of industries, including maritime, weather, aviation, government, and space services. Some of their services are used to track ship data and high-frequency weather data, which is then used to monitor trade, piracy, illegal fishing, and maritime domain awareness.
Just recently, Spire Global was awarded a CA $1.41M contract from the Government of Canada, for the provision of global automatic identification system ship tracking data. Spire will share its real-time global ship tracking data, providing unparalleled visibility in both open oceans and high-traffic zones. The contract is for one year, and includes options for two additional years, which would extend the potential contract value to nearly CA $4.23M. This follows an announcement back in June of Spire Global signing a Memorandum of Cooperation (MOC) with Thales and European Satellite Services Provider (ESSP), to develop a satellite constellation and offer new space-based surveillance services for Air Navigation Service Providers (ANSPs).
On May 15th, they shared their Q1 earnings report. While revenue did fall a couple million short of expectations at $25.7M, it did grow 6% YoY. Their loss per share of -$0.53 was $0.05 better than anticipated. They noted remaining contract obligations not yet recognized as revenue of over $195M, and reiterated their expectations for positive cash flow from operations for the remainder of 2024.
Weighing in on the Spire Global stock is analyst Erik Rasmussen from Stifel. He said the firm believes this has the potential to be a “meaningful win for Spire to be partnered with leading A&D companies.” Given the magnitude of this announcement, the firm sees the total value of this contract to be “potentially in the several hundred million dollar range over a roughly 4-5 year period,” with the potential for a refresh of the constellation as these satellites become obsolete creating a “continuous revenue stream for Spire. (See Rasmussen’s track record)
Spire Global has 5 current analyst ratings, all rating the stock a Buy. The average Price Target of $18.00 implies an upside potential of 27% from current prices. (See SPIR Stock Forecast)
PowerFleet (AIOT)
Next up is PowerFleet, who engages in the provision of fleet management solutions for logistics, industrial, and vehicles. They are a global provider of software-as-a-service (SAAS) and internet-of-things (IoT) solutions used for managing and tracking high-value assets, such as industrial trucks, shipping containers, cargo, and vehicle & truck fleets. With their Unity platform, users can livestream data to enhance safety, security, maintenance and performance.
Their last earnings report came out March 12th, where they shared their Q4 and FY23 earnings. For the quarter, they reported EPS of $0.04, beating estimates by $0.06. Their Q4 revenue was $34.5M, which was up 9% YoY and their best quarterly revenue in six quarters. Looking at the full fiscal year 2023, total revenue increased 4% and the company implemented significant cost reduction initiatives. They are scheduled to report their Q2 earnings on August 7th, 2024 where analysts are anticipating EPS of -$0.06.
Scott Searle of Roth MKM recently reiterated their Buy rating on the stock, issuing a Street-high Price Target of $11. They noted that the stock is trading at a “dramatic discount to comps” and represents a “multi-bagger opportunity.” The firm’s meeting with the company’s management team has left it “extremely comfortable” regarding its near-term execution and roadmap, the analyst tells investors in a research note, noting that while PowerFleet provided no financial updates, it continues to track near-term expectations which are largely cost optimization driven. (See Searle’s track record)
With 6 current analyst ratings, the PowerFleet stock is another unanimous Strong Buy. The average Price Target of $8.75 would imply an upside potential of 71% from current prices. (See AIOT Stock Forecast)
Turtle Beach (HEAR)
Third on our list is Turtle Beach. They are a gaming accessories company with a focus on audio peripherals. Turtle Beach operates through two main segments – their HyperSound segment and Headset segment. The HyperSound segment refers to a patent-protected sound technology that delivers immersive, directional audio with applications in digital signage and kiosks, consumer electronics, and hearing healthcare. The Headset segment offers gaming headset solutions for video game and entertainment consoles, personal computers, and mobile and tablet devices. Their product lineup also includes keyboards, mice, flight systems, racing wheels, and game controllers.
Turtle Beach is scheduled to report their Q2 on August 8th, 2024, where analysts are anticipating EPS of -$0.03, compared to last years -$0.41. They shared their Q1 report on May 7th, where they had an earnings beat at EPS of $0.01, coming in $0.23 better than expected. Net revenues were $55.8M, which increased 8.6% compared to the prior year. They noted that diligent cost management initiatives significantly improved their adjusted EBITDA profitability. They reiterated their 2024 outlook, expecting net revenues in the range of $370M to $380M, and a long-term goal of 10%+ revenue CAGR.
Following that earnings report, we heard from Maxim Group analyst Jack Vander Aarde, who reiterated his Buy rating on the stock. He noted the company’s recent acquisition of Performance Designed Products (PDP), saying this acquisition is anticipated to be highly accretive to Turtle Beach, providing immediate scale, diversified product offerings, and substantial cost synergies. Moreover, Turtle Beach’s management has reiterated guidance for significant year-over-year growth in revenue and adjusted EBITDA, projecting continued strong performance into 2024. (See Vander Aarde’s track record)
Turtle Beach’s unanimous Strong Buy rating comes from 4 current analyst ratings. The average Price Target of $21.50 implies an upside potential of 36% from current prices. (See HEAR Stock Forecast)
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