Among the many possibilities available, growth-oriented investors find small-cap stocks to be particularly interesting. Here are three small-cap equities, particularly those always searching for clear, significant gains. Each one offers different chances to take advantage of their development potential in the financials, industrials, and consumer staples sectors.
The first one sticks out for its strong lead in the mortgage insurance industry. It showcases adaptability and tenacity in gaining a bigger market share. Meanwhile, the second one has exhibited a progressive approach to expansion by deliberately broadening the range of services it provides. The company is going beyond executive search. Finally, the third one has demonstrated skillful handling of operational difficulties. This increases gross margin and net sales growth, especially in foreign markets.
Their unwavering commitment to innovation, flexibility, and calculated growth ties these three businesses together. By maintaining a competitive edge, employing diversification strategies, and optimizing operations, these companies have positioned themselves for substantial expansion in the years to come, instilling confidence in their potential for growth.
NMI Holdings (NMIH)
The $9.4 billion in New Insurance Written (NIW) volume derived by NMI Holdings (NASDAQ:NMIH) during Q1 2024 indicated the company’s new solid business output. This shows how much new mortgage insurance was written during the quarter, a sign of the company’s ability to draw in new clients who are lenders looking to insure their customers’ mortgages.
Furthermore, the growth trajectory of NMI Holdings’ insured portfolio is highlighted by the notable rise in primary insurance in force, which reached $199.4 billion after Q1 2024. When compared to Q1 2023, which was $186.7 billion, the portfolio size has grown by 6.8% year-over-year (YoY). Such expansion demonstrates NMIH’s capacity to increase its market share for mortgage insurance. Similarly, it bolsters the company’s standing as the sector’s top supplier.
Finally, NMI Holdings’s persistency rating of 85.8% in the first quarter shows that it maintains an extraordinarily high-quality insured portfolio. The persistence rate gauges how long insurance policies are in force, revealing how well NMI Holdings holds onto current clients and avoids policy cancellations.
Heidrick & Struggles (HSII)
Heidrick & Struggles (NASDAQ:HSII) has the potential for solid expansion since it has smartly expanded its fundamental capabilities beyond executive search. The company’s focus on growing its service offering to include On-Demand Talent, Heidrick Consulting, and Heidrick Digital reflects its diversification approach. Heidrick & Struggles has minimized the risks attached to changes in the executive search segment by diversifying its income streams and reducing its reliance on that source alone.
Moreover, the diversified solutions market saw strong growth in 2023, a startling 44% rise over the year before. This development pattern amply demonstrates the effectiveness of Heidrick & Struggles’ diversification initiatives. In addition, the non-search segment’s share of overall revenue climbed from 9% in 2018 to 24% in 2023, demonstrating the success of the company’s diversification strategy over time.
Lastly, a primary factor contributing to the diversification strategy’s effectiveness is the seamless amalgamation of accretive and strategic acquisitions. For example, acquiring B40 and Atreus was crucial in supporting the expansion of the Heidrick Consulting and On-Demand Talent business units.
Conagra (CAG)
Adjusted gross margin for Conagra (NYSE:CAG) grew by 0.52% to 28.7% in Q3 fiscal 2024, a solid gain. Obstacles like declining organic net sales and rising costs of goods sold impeded growth. Despite these obstacles, the company has the fundamental capacity to raise its gross margin, suggesting that its cost-control strategies and operational sharpness are working. Conagra’s increased operational efficiency is reflected in a 2.4% YoY rise in gross profit. This enhancement implies that Conagra has optimized its resource usage and manufacturing procedures.
Moreover, due to a 4.2% rise in price/mix, the Grocery & Snacks division recorded a 3.4% YoY gain in net sales. This increase shows Conagra’s price initiatives and product mix optimization within this category have proven beneficial. Hence, Conagra’s international division saw positive net sales growth of 4.6% YoY, supported by increased organic net sales and good foreign currency effects.
Overall, this growth demonstrates the company’s sharp entry into foreign markets, as evidenced by its impressive results in regions like Mexico.
As of this writing, Yiannis Zourmpanos held long positions in HSII and CAG. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
