4 Small-Cap Growth Stocks to Buy in Q4

The Federal Reserve’s plans to tighten its monetary policy, supply-chain disruption, high oil prices, and continuing spread of the COVID-19 Delta variant are expected to continue fueling stock market volatility. In addition, the 10-year Treasury yield hit 1.67%, retracing its mid-May highs..

However, a solid start to the third-quarter earnings season has dominated investor sentiment. The S&P 500 and the Nasdaq extended their winning streaks to five sessions, and the Dow Jones also advanced, logging its third gain in the past four sessions. Furthermore,  last month, Jeff Mills, the chief investment officer at Bryn Mawr Trust, asserted that small-cap stocks could present the best opportunity.

Given the continuing low-interest-rate environment, we think it could be wise to bet on quality small-cap stocks Entravision Communications Corporation (EVC), Rigel Pharmaceuticals, Inc. (RIGL), SIGA Technologies, Inc. (SIGA), and Charles & Colvard, Ltd. (CTHR).

Entravision Communications Corporation (EVC)

With a market capitalization of $653.01 million, Santa Monica, Calif.-based EVC operates as a media, marketing, and technology company worldwide. The company operates through three segments: Television; Radio; and Digital. It reaches and engages Hispanics across media channels, and its portfolio encompasses integrated marketing and media solutions.

On August 31, 2021, EVC announced that it had acquired the remaining 49% interest in Cisneros Interactive. It now owns 100% of Cisneros Interactive, having first obtained a majority stake in the company in October 2020. With this complete acquisition, EVC is expected to be one of the largest premier global digital advertising solutions companies.

EVC’s net revenue increased 295% year-over-year to $178.41 million for its fiscal second quarter, ended June 30, 2021. The company’s adjusted EBITDA grew 932% year-over-year to $17.79 million, while its net income increased 348% to $10.48 million. Also, its EPS came in at $0.09, up 200% year-over-year.

For its fiscal year 2021, analysts expect EVC’s EPS and revenue to increase 733.3% and 115.7%, respectively, year-over-year to $0.38 and $742.01 million. In addition, it surpassed the Street’s EPS estimates in three of the trailing four quarters. The stock has gained 290.3% over the past year to close yesterday’s trading session at $7.65.

EVC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.

It has an A grade for Momentum, and a B grade for Value and Quality. Click here to access the additional POWR Ratings for EVC (Sentiment, Growth, and Stability). EVC is ranked #3 of 12 stocks in the B-rated Entertainment - Broadcasters industry.

Rigel Pharmaceuticals, Inc. (RIGL)

Biotechnology company RIGL discovers and develops small molecule drugs to treat hematologic disorders, cancer, and rare immune diseases. The San Francisco company offers Tavalisse, an oral spleen tyrosine kinase inhibitor, to treat adult patients with chronic immune thrombocytopenia. Also, it has a $570.64 million market capitalization.

On September 1, 2021, RIGL announced results from a Phase 2 clinical trial evaluating the safety of fostamatinib to treat hospitalized patients with COVID-19. Raul Rodriguez, the president and CEO of RIGL, said, “With the need remaining so great, we are very pleased with the growing body of evidence that suggests fostamatinib may provide clinical benefit for those patients hospitalized with COVID-19.”

RIGL’s total revenue increased 63.9% year-over-year to $26.27 million for its fiscal second quarter, ended June 30, 2021. The company’s cash, cash equivalents, and short-term investments grew 167.6% sequentially to $153.39 million, while its total assets increased 82.6% sequentially to $201.60 million.

Analysts expect RIGL’s EPS and revenue to increase 83.3% and 46.6%, respectively, year-over-year in its fiscal year 2021. Over the past year, the stock has soared 28.5% in price to close yesterday’s trading session at $3.34.

RIGL’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to a Buy in our proprietary rating system. The stock has a B grade for Value and Quality.

Within the Medical - Pharmaceuticals industry, RIGL is ranked #32 of 210 stocks. Click here to see the additional POWR Ratings for RIGL (Growth, Momentum, Sentiment, and Stability).

Click here to checkout our Healthcare Sector Report for 2021

SIGA Technologies, Inc. (SIGA)

With a $524.79 million market capitalization, New York City-based SIGA is a commercial-stage pharmaceutical company focused on the health security and infectious disease markets in the United States. Its lead product is TPOXX, an orally administered antiviral drug for treating human smallpox disease caused by the variola virus.

On June 30, SIGA announced that it provided TPOXX to Liverpool University Hospitals NHS Foundation Trust to treat a patient confirmed to be infected with monkeypox. Phil Gomez, the company’s CEO, said, “It is becoming clear TPOXX will be an important tool to treat these diseases throughout the world, and we are committed to expanding our regulatory approvals and provide access for patients.”

SIGA’s total liabilities decreased 15.3% year-over-year to $16.96 million for its fiscal second quarter, ended June 30, 2021. Its operating expenses decreased 25.1% year-over-year to $8.65 million.

For its fiscal year 2022, analysts expect SIGA’s EPS and revenue to increase 8.1% and 4.4%, respectively, year-over-year to $0.80 and $124.50 million The stock has surged 17.9% in price over the past three months to close yesterday’s trading session at $6.99.

SIGA’s POWR Ratings reflect solid prospects. The company has an overall B rating, which translates to Buy in our proprietary rating system. It has an A grade for Value and Quality.

Click here to see the additional POWR Ratings for SIGA (Growth, Stability, Momentum, and Sentiment). SIGA is ranked #32 of 503 stocks in the Biotech industry.

Click here to checkout our Healthcare Sector Report for 2021

Charles & Colvard, Ltd. (CTHR)

Fine jewelry company CTHR in Morrisville, N.C., manufactures, markets, and distributes moissanite jewels, finished moissanite jewelry, and premium moissanite gemstones under the Charles & Colvard Created Moissanite and Forever One brand names. It also markets and distributes lab-grown diamonds and finished jewelry with lab-grown diamonds under the Caydia brand. It has a market capitalization of $91.02 million.

On July 13, 2021, CTHR announced a new strategic commercial banking relationship with JPMorgan Chase & Co. (JPM), which includes entering a $5 million credit facility. This broad-ranging banking relationship provides a foundation for the company to solidify its financial objectives and expand its financial capabilities in the future.

CTHR’s net sales increased 120% year-over-year to $9.73 million for its fiscal fourth quarter, ended June 30, 2021. The company’s total assets grew 32.7% year-over-year to $64.92 million, while its net income came in at $8.38 million, versus a $1.03 million loss in the prior year. Also, its EPS came in at $0.27 compared to a $0.04 loss per share in the year-ago period.

Analysts expect CTHR’s EPS and revenue to increase 30.8% and 9.1%, respectively, year-over-year in fiscal 2023. In addition, it surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past year, the stock has soared 248.1% in price to close yesterday’s trading session at $3.

It’s no surprise that CTHR has an overall B rating, which equates to a Buy in our POWR Rating system. In addition, the stock has an A grade for Momentum and Sentiment, and a B grade for Growth.

Click here to see CTHR’s ratings for Value, Stability, and Quality as well. In addition, CTHR is ranked #13 of 73 stocks in the Consumer Goods industry.

EVC shares were trading at $7.84 per share on Wednesday afternoon, up $0.19 (+2.48%). Year-to-date, EVC has gained 189.20%, versus a 22.20% rise in the benchmark S&P 500 index during the same period.

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.

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