3 small-cap stars with the power to triple your investment by 2026

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Small-cap stocks often hide hidden gems of untapped potential. They are waiting to be discovered by smart investors. Among these, his three outstanding companies have emerged as promising stars that will achieve dramatic growth.

The first company on the list has resilient financial stability. The second is strategic asset acquisition in the energy field. Meanwhile, the third is diversification of revenue sources across multiple industries. Each company will introduce cutting-edge investment cases.

Basically, these companies are not just companies listed on the stock market. These reflect strategic foresight, operational excellence, and adaptability to market changes. This article delves into the core strengths of these small-cap stars. Learn about their growth trajectory and the potential to triple your investment by 2026.

Hart Hanks (HHS)

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hart hanks (NASDAQ:Department of Health and Welfare) Achieve strong financial stability and liquidity. These are the fundamental strengths that underpin its value growth potential. For example, as of Q3 2023, Harte Hanks had $13.3 million in cash, but at the end of 2022, he had $10.4 million. This increase in cash reserves indicates increased liquidity.

Additionally, the company remained debt-free with no outstanding debt as of the third quarter. The absence of debt reduces financial risk under the Fed’s long-term scenario and provides financial flexibility to meet strategic and operational needs.

The company also had $24.2 million in financing capacity as of the third quarter. This credit facility is a backup liquidity source and provides Hart Hanks with access to additional capital. The availability of credit provides a safety net and supports a company’s ability to manage and pursue growth opportunities.

Notably, during the third quarter, Hart Hanks repurchased 77,227 shares at an average price of $6.35 per share, for a total value of $490,000. This indicates management’s bullish stance on the company’s financial health and prospects. Additionally, the share buyback will have a positive impact on his EPS in the coming quarters.

At the top, Harte Hanks maintains diversification across multiple segments, reduces reliance on a single source, and experiences industry-specific fluctuations. The company operates in his three main segments: Customer care accounted for 30% of his total revenue in the third quarter, while fulfillment and logistics services accounted for 48% and marketing services accounted for 22%.

Finally, the company remains positive for growth despite declining revenue in some segments. For example, the acquisition of InsideOut contributed $2.2 million to his third-quarter revenue, indicating inorganic growth potential. Overall, expansion into new areas is likely to continue to drive revenue growth and value expansion.

Evolution Petroleum (EPM)

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At its core, evolution petroleums (New York American:EPM) Strategic asset acquisitions and related developments support value growth. In detail, Evolution Petroleum strategically acquires and develops assets. These assets have attractive risk and return profiles. As a result, it increases a company’s competitiveness and promotes value creation.

First, the Participatory Agreement to horizontally develop parts of the Permian Basin and New Mexico’s Chavellow oil field demonstrates that strategy. By the numbers, the Chavero field offers more than 80 gross and 40 net locations for horizontal development, with an estimated 700 million barrels of original oil. Fundamentally, focusing on high-potential opportunities like the Chabeloo oil field will help Evolution Petroleum maximize its economic returns. This also diversifies the company’s asset base and supports future growth.

Additionally, Evolution Petroleum’s prudent capital allocation reflects the fact that it directs the majority of its funds toward productive investments such as drilling and oil production. This approach minimizes risk and optimizes potential value by prioritizing expenditures that have the potential to generate significant benefits.

Additionally, the company is focused on acquiring strategic production assets to further enhance its growth potential. Accordingly, Evolution Petroleum strengthens its ability to generate predictable cash inflows by targeting assets with proven reserves, low decline rates, and attractive economics.

Finally, the strategic partnership with Pedevco in the Permian Basin signals Evolution Petroleum’s radical approach to resource development. This means that by leveraging the expertise and resources of its partners, the company accelerates value creation and strengthens its competitive advantage in the energy market.

Overall, Evolution Petroleum is focused on strategic asset acquisition and development, with the potential to continue to drive rapid value growth through a diversified asset portfolio.

RCM Technologies (RCMT)

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RCM Technologies (NASDAQ:R.C.M.T.) has a stable top line and segmental growth is supporting the market valuation. Notably, RCM Technologies’ Q3 2023 revenue was $58 million, a slight decrease of 0.2% year over year. Although revenue declined slightly, the company provided a stable revenue stream. Structurally, there is a segmentation of revenue across various business segments, including healthcare, engineering, energy services, life sciences, IT, and aerospace.

Ultimately, gross profit for the period was $17.3 million, stable year-over-year. This reflects the company’s optimization efforts. On the bright side, gross margin improved sequentially from 22.9% in the second quarter to 25.0% in the third quarter, demonstrating effective cost management. Third quarter operating income ($4.3 million) was stable year-over-year ($4.8 million in Q3 2022). Specifically, EPS for the third quarter was $0.46 per diluted share, compared to $0.33 per diluted share for the third quarter of 2022. Although operating profit decreased slightly, the company improved its profitability.

Behavioral health services are driving business growth. The company serves more than 30 clients and shows potential for revenue expansion. Despite the challenges (the end of coronavirus-related revenue), the company has proven itself adaptable by strategically focusing on high-value segments. Meanwhile, engineering gross profit for the third quarter of 2023 increased by 5.2% based on increased project activity. Therefore, engineering project backlogs and pipelines are increasing, highlighting the potential for solid revenue growth.

Despite some fluctuations in performance, the company has an optimistic outlook. This is supported by expected adjusted EBITDA and revenue growth in the coming quarter. Therefore, this guidance reflects the company’s strategic direction and ability to leverage market demand and enhance its valuation.

On the date of publication, Yanis Tsurpanos did not have (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com Publishing Guidelines.

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