When researching which stocks to buy, and trying to find good deals on them, using a stock screener can be a quick and easy way to sort through the thousands of public companies available for investing in. By searching through a screener, investors can find any kind of stock based on the criteria they outline. So, let’s take a look a one of the higher-risk, but higher-reward types of investment: undervalued small-cap stocks.
For this article, we’ll consider any public company with a market value between $300 million and $2 billion a small-cap stock. While that range is broad, it’s important to remember that the major market movers now run in the hundreds of billions to trillions of dollars in value. Due to their size, these companies are not commonly found in media publications or discussed by major analytical firms. For investors seeking opportunities outside the norm, here are three undervalued small-cap stocks selected using their price-to-earnings ratio, trading volume, and overall long-term cash generation prospects.
Ecovyst (ECVT)
A highly specialized chemicals company, Ecovyst (NASDAQ:ECVT) holds the key to several critical manufacturing processes across the plastics and metals industries. That’s because ECVT’s main money-making compounds are its silicas, catalysts and zeolites. These are all classes of chemical or chemical superstructures that are used to increase the rate and yield of chemical reactions for converting ethylene into polyethylene among other important applications.
This specialized niche has made Ecovyst an industry expert in producing such critical catalysts and doing it in relatively more environmentally friendly ways than others. This helps with its long-term sustainability prospects as a company.
Despite this success, the company has struggled immensely over the last five years to maintain its share price. Though down 45% over the last five years and within 10% of its 52-week low, ECVT has a chance for a major comeback as it improves its net income and profit margins this year in preparation for expansion.
Greenbrier Companies (GBX)
Though the rail network in the United States is the most neglected it has ever been, it is still a critical component of trade infrastructure across the country. However, should it be revived, a company like Greenbrier Companies (NYSE:GBX) could see substantial gains as its business becomes more in demand.
The company is now one of the major members of freight railcar manufacturing, refurbishment, leasing, and management services for freight operators. Regardless of the debate around high-speed rail in the United States, GBX has the opportunity to profit from the new government spending, via the Infrastructure Investment and Jobs Act, on improving rail networks across America.
Should the capacity increases succeed from this bill, GBX will have more customers to sell its railcars and services to, increasing its likelihood of doubling its value over the next few years. Thus, investors might want to keep an eye on undervalued small-cap stocks like GBX as the economy grows.
Movado Group (MOV)
An ever-evolving member of the watchmaking industry, Movado Group (NYSE:MOV) has recently hit a marketing stride with its ultra minimalist watch designs and pedigree. Though the stock is down 20% year-to-date and is within 5% of its 52-week low, the company’s history and current investments in branding could carry it back to success.
That’s because Movado plays both sides of the watchmaking industry. On one hand, the watch industry sells to purists who love watches for their mechanical prowess and heritage. On the other, the industry also caters to consumers who are more attracted by flashy brand names and recognizable badges. Movado sits squarely in the middle, as its main Movado-branded line of watches is Swiss-made, following the company’s founding history, while its other brands focus on making watches that carry big names like Lacoste, Hugo Boss and Tommy Hilfiger.
As a result, the company caters to a wide consumer base and will likely see its prospects continue to rise over the years as more and more people are attracted by its two sided approach.
On the date of publication, Viktor Zarev 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.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.
