Some traders just aren’t interested in small-cap stocks … and they could be missing out.
These companies may not be household names, but there’s a lot of potential in some of them.
The year’s been off to a hot start. We’ve seen many small caps in hot sectors break out.
Electric vehicles, e-sports, 3D printing, stay-at-home plays — there are so many sectors with breakout potential. I keep tabs on it all and send out a weekly watchlist. Sign up to get my picks in your inbox every Sunday for no cost!
Read on to find out about seven small-cap stocks worth watching in 2024 and why I think they could be on their way to breaking out. I’ll also answer some frequently asked questions about small caps. Let’s go.
Table of Contents
- 1 Small-Cap Stocks: Definition
- 2 What Is Considered a Small-Cap Stock?
- 3 Characteristics of a Small-Cap Stock
- 4 Why Should You Trade Small-Cap Stocks?
- 5 Small-Cap Companies
- 6 7 Top Small-Cap Stocks to Watch in 2024
- 7 Best Small-Cap Stocks for 2024
- 7.1 #1: Corbus Pharmaceuticals Holdings, Inc. (NASDAQ: CRBP) — The Supernova Biotech Stock
- 7.2 #2: Bullfrog AI Holdings Inc (NASDAQ: BFRG) — The AI Psychiatric Research Stock
- 7.3 3: Rail Vision Ltd (NASDAQ: RVSN) — The AI Rail Safety Stock With EU Approval
- 7.4 4: Foxo Technologies Inc (AMEX: FOXO) — The AI-Powered Epigentic Wellness Stock
- 7.5 5: Spirit Airlines, Inc. (NYSE: SAVE) — The Failed Merger Budget Airline Stock
- 7.6 6: Rumble Inc (NASDAQ: RUM) — The Barstool Partnership Stock
- 7.7 7: Phunware Inc (NASDAQ: PHUN) — The DWAC Sympathy Stock
- 8 Potential Benefits of Trading Small-Cap Stocks
- 9 Example of a Small-Cap Stock
- 10 How to Analyze Small-Cap Stocks
- 11 Risks of Trading Small-Cap Stocks
- 12 Where to Find Small-Cap Stocks
- 13 Frequently Asked Questions About Small-Cap Stocks
- 14 Small-Cap Stocks: The Bottom Line
Small-Cap Stocks: Definition
A small-cap stock is a stock with a market capitalization between $100 million and $2 billion.
Market capitalization — market cap — is the value of a company’s outstanding shares. It’s calculated by multiplying the share price by the number of shares.
What Is Considered a Small-Cap Stock?
Any stock with a market cap of less than $2 billion could be considered a small-cap stock. It doesn’t matter what sector the company’s in.
Characteristics of a Small-Cap Stock
Small-cap stocks are mostly smaller, up-and-coming companies. Some are penny stocks.
But there’s also more growth potential and a greater chance for big moves. That’s what makes them attractive to traders.
Why Should You Trade Small-Cap Stocks?
Trading small-cap stocks can be riskier than trading well-established stocks. Make sure a small-cap stock fits in with your trading goals, and that you understand the risk and have a solid trading plan.
If you’re a high risk/high reward kind of trader, then trading small-cap stocks might be for you. But make sure you have a good trading plan with an entry/exit strategy — and stick to it. Do your research.
Small-cap companies may have good growth potential … But because they can be risky, it’s important to find out as much as you can about them. Do your research. Check their website.
What does their financial performance look like? Have there been any management changes? Do their press releases have real news, or are they just fluff? Do you see any red flags?
Some of these companies won’t have the greatest financials or earning reports. That’s OK — as long as you have a plan to trade them. That means setting reasonable goals while setting levels for your risk. These stocks tend to be better for day trading. Make sure you’re prepared.
7 Top Small-Cap Stocks to Watch in 2024
My top small-cap stocks to watch for 2024 are:
- NASDAQ: CRBP — Corbus Pharmaceuticals Holdings, Inc. — The Supernova Biotech Stock
- NASDAQ: BFRG — Bullfrog AI Holdings Inc — The AI Psychiatric Research Stock
- NASDAQ: RVSN — Rail Vision Ltd — The AI Rail Safety Stock With EU Approval
- AMEX: FOXO — Foxo Technologies Inc — The AI-Powered Epigentic Wellness Stock
- NYSE: SAVE — Spirit Airlines, Inc. — The Failed Merger Budget Airline Stock
- NASDAQ: RUM — Rumble Inc — The Barstool Partnership Stock
- NASDAQ: PHUN — Phunware Inc — The DWAC Sympathy Stock
I’m not holding any long-term positions in these tickers. I’m just watching these stocks. This is one of many watchlists I maintain…
There’s no guarantee that any of my watchlist picks will be tradeable. But if something happens, smart traders should be ready.
Here’s some background info on small-cap stocks:
- What is the most promising small-cap penny stock?
A stock with a lot of volatility like Bullfrog AI Holdings Inc (NASDAQ: BFRG) is a promising small-cap penny stock. But remember — we’re traders, not investors. We’re watching the stocks on this list for short-term volatility that we can trade, not predicting which of these stocks will still be around in 2030.
- What are the top 3 small-cap penny stocks to buy now?
My top 3 small-cap penny stocks to buy now (as long as their price action is strong) are Corbus Pharmaceuticals Holdings, Inc. (NASDAQ: CRBP), Rail Vision Ltd (NASDAQ: RVSN), and Bullfrog AI Holdings Inc (NASDAQ: BFRG).
- Which small-cap penny stocks have a “Strong Buy” analyst rating?
Analysts don’t give any small-cap penny stocks “strong buy” ratings. These stocks are sketchy and unstable — you should never “invest” in them. Always trade with a plan.
Let’s get to the picks …
Best Small-Cap Stocks for 2024
These are my top small-cap stocks to watch in 2024…
They have a chance to catch fire…
Watch them — and don’t get burned!
#1: Corbus Pharmaceuticals Holdings, Inc. (NASDAQ: CRBP) — The Supernova Biotech Stock
My first small-cap stock pick is Corbus Pharmaceuticals Holdings, Inc. (NASDAQ: CRBP).
First of all, you have to understand the importance of sector momentum.
At any given time in the market, some stocks are hotter than others. We want to focus on the best plays because they give us the highest chance of success.
Biotech stocks were hot during ALL of 2023. And 2024 shows a lot of the same momentum.
If there’s a low-priced biotech stock that’s spiking with news: Pay attention.
Now, let’s discuss the opportunity on CRBP.
On January 26 at 7:30 A.M. Eastern, the company announced positive data from its first human study for a drug that targets cancerous tumors.
That’s BIG news.
Biotech companies can announce a wide variety of catalysts. But positive data from a human cancer trial … That takes the cake.
It was the obvious #1 watch during our morning livestream. My system alerted it during premarket hours. And that was WAY before it reached the highs that day.
In total, the move measures 370%. It’s an incredible supernova!
The price pulled back on Monday, January 29. But it kept pushing higher on January 31 even after it announced a share offering below the current price!
I can’t tell you the last time I saw a crappy biotech stock announce positive data from a human cancer study. This news is unique and it has legs!
The chart is struggling to find support right now. That means there’s still time to plan a trade on this massive runner.
Pay attention to key support and resistance.
You don’t want to get stuck on the wrong side of this thing.
#2: Bullfrog AI Holdings Inc (NASDAQ: BFRG) — The AI Psychiatric Research Stock
My second small-cap stock pick is Bullfrog AI Holdings Inc (NASDAQ: BFRG).
The biotech sector is red hot in our small-cap niche.
But in the larger market, AI is the star of the show.
Our niche isn’t directly related to the larger market. But there is an indirect relationship.
When the larger market is strong, the plays in our niche are larger and more abundant. We can also identify specific sector momentum that trickles down.
BFRG is one of the hottest penny stocks in the AI sector right now. And as the tech rally continues, so could the BFRG spike …
On January 17 the company announced a business partnership with Lieber Institute to build more complex models of the brain using AI. The spike turned into a multi-day run. And currently, the move measures 210%.
Share prices pulled back on January 29. Now’s the time to pay attention: We can use past price action to plan a trade.
3: Rail Vision Ltd (NASDAQ: RVSN) — The AI Rail Safety Stock With EU Approval
My third small-cap stock pick is Rail Vision Ltd (NASDAQ: RVSN).
This is another multi-day runner.
Notice the strength in our niche right now. This is not a coincidence.
The larger market surged in 2023 and it already pushed higher in 2024. This bullish momentum is set to continue.
On January 22 RVSN announced it secured EU regulatory approval for railway standards.
Over the next few days, prices spiked 1,000%. And it’s still trading near the highs.
There are a few ways to approach this trade. My top suggestions are below.
- Wait for the price to pull back and build a position above support.
- Panic dip buy after a drastic selloff.
You could argue the price is overextended, and thus that it’s a prime opportunity to short-sell.
But I don’t encourage my students to short these stocks. Technically, there’s no limit to the amount of money a short seller could lose. Stocks can theoretically spike forever.
Conversely, if I buy a $2 stock and the price drops to $0, I only lose the money that I put in. Short sellers could lose A LOT more if the price spikes instead …
That’s why we focus on long positions. There’s less risk when it comes to the extreme possibilities.
4: Foxo Technologies Inc (AMEX: FOXO) — The AI-Powered Epigentic Wellness Stock
My fourth small-cap stock pick is Foxo Technologies Inc (AMEX: FOXO).
This stock wants to spike really badly.
And the company is doing its best to push out hyped-up press releases.
On December 1 FOXO confirmed plans to debut its AI health coach early in 2024. The price spiked 70% but gave back all of its gains the very next day.
On January 19 it tried again.
The company announced a license agreement with KR8.ai to personalize wellness solutions based on a person’s genes with the help of AI. Prices spiked 40% and then it gave it all back.
I don’t know when this stock will spike next. But it has all of the right factors:
- It’s in the AI sector.
- It has a float below 10 million shares.
- The low supply will help prices spike higher when demand increases.
- The company knows how to announce hot news.
- It has a decent history of spiking.
All it takes is one good press release.
I’m ready when this stock decides to take off.
5: Spirit Airlines, Inc. (NYSE: SAVE) — The Failed Merger Budget Airline Stock
My fifth small-cap stock pick is Spirit Airlines, Inc. (NYSE: SAVE).
Spirit Airlines was on track to merge with JetBlue.
But on January 16, legal courts blocked the purchase. And as a result, SAVE prices tumbled 60% in one day.
There’s currently a bid to repeal the decision. But there’s no telling whether it will work. I’m interested in SAVE because the stock price is at a huge discount compared to early January.
The stock might not make it back to its previous levels, but we can still ride the short-term volatility.
For example, after the huge selloff, prices spiked 130%.
That’s price action we can profit from.
6: Rumble Inc (NASDAQ: RUM) — The Barstool Partnership Stock
My sixth small-cap stock pick is Rumble Inc (NASDAQ: RUM).
Rumble is a growing media company that bills itself as a YouTube alternative.
In the last couple of years, a slew of personalities and videos were banned from YouTube for a variety of reasons.
The censorship is a huge point of contention for certain creators. And Rumble’s goal is to provide a free space for those creators to post content.
On January 22, during premarket hours RUM announced a partnership with Barstool Sports.
Portnoy confirmed Barstool would air its video content on Rumble.
Barstool and Dave Portnoy have a HUGE following. The main Barstool Instagram has 15.7 million followers.
Since the news went public, share prices of RUM spiked 90%. And it’s currently moving toward the breakout level at $7. The chart shows a lot of consolidation around $5.50 before the most recent rally.
I don’t know how far the price will spike.
All I can do is trade the best price action while it lasts.
7: Phunware Inc (NASDAQ: PHUN) — The DWAC Sympathy Stock
My seventh small-cap stock pick is Phunware Inc (NASDAQ: PHUN).
The 2024 political election is in full swing.
And certain political events have already acted as catalysts for small-cap stock spikes. We’ve seen this happen in the past too.
PHUN was involved in Trump’s 2020 election campaign. You can scroll back on the chart to see that spike.
More recently, Donald Trump won the Republican Iowa caucus on January 15. PHUN spiked 580% the next day. And it’s not the only runner associated with former President Trump.
Digital World Acquisition Corp. (NASDAQ: DWAC) spiked 230% following his win in Iowa. DWAC is a SPAC that represents Trump’s social media company, Truth Social.
It’s no surprise these stocks are spiking while Trump wins key political races. They’re past spikers. And they’re directly associated with the polarizing political figure.
But understand: These spikes are unsustainable.
Trump may win the Republican nomination. But that doesn’t mean PHUN’s puny software company is worth more money. The same goes for DWAC and Trump’s social media company.
The spikes are due to hype. But we can use that hype to profit.
PHUN prices are trying to consolidate and rally off of the $0.30 level.
I like DWAC but I’m focused on PHUN because the share price is cheaper.
If the shares are cheap, I can load up and ride the percent gain for bigger profits.
That’s the whole idea behind this profit strategy.
Track the price action and wait for the perfect entry.
Don’t trade without a plan! That’s how a gambler operates. And gamblers get eaten alive out here.
Potential Benefits of Trading Small-Cap Stocks
Trading small-cap stocks may be risky, but there are potential benefits.
The lower prices make them attractive to newer traders and those with small accounts. That means more people can trade them. More buyers mean higher trading volume — and higher trading volume means more volatility. That means more chances for price swings.
Example of a Small-Cap Stock
Let’s look at SLGG, one of the companies listed above. It’s currently trading in the $6s and $7s and has a market cap of over 150 million shares.
SLGG trades an average of more than 8 million shares a day — that’s a decent amount of trading volume. It spiked in early March from the $5 area to almost $9 on a surge in volume, meaning this stock has a history of good price action and volatility.
This is a prime example of what many day traders look for in small-caps.
How to Analyze Small-Cap Stocks
There’s not always a lot of readily available information on small-caps. Analysts and investors may not pay much attention to them. This can leave traders to fill in the gaps.
But you can scan for these stocks and so much more with the StocksToTrade platform. It has beautiful charts, built-in scanners — even for small-caps — and so much more! Get a 14-day trial for just $7 here.
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Get StocksToTrade + the Breaking News Chat add-on in a 14-day trial — it’s just $17.
Risks of Trading Small-Cap Stocks
Of course there are risks with these stocks. There’s risk in all trading. So if you trade small-cap stocks, you need a solid approach for your risk management. That starts with knowing your risk tolerance…
But with small-caps, you also have to consider more volatility. It’s not unusual to see greater price fluctuations in lower-priced stocks. This can be great if you’re ready for it, but it can also be stressful. Prices can fluctuate so quickly, you may miss an exit point in the blink of an eye.
You can practice trading them to get used to the fast, wild moves with paper trading or by trading small positions.
That’s how you learn why it’s so important to stick to your trading plan and manage your risk. And if you trade these stocks, consider setting stop-loss orders and limit sell orders to help protect your account.
Where to Find Small-Cap Stocks
Finding small-cap stocks to trade has never been easier. It all starts with a great scanner.
Scanning can be easy with StocksToTrade’s built-in scans and point-and-click scanner. Get a 14-day trial for StocksToTrade for just $7 now! Or add the game-changing Breaking News Chat add-on for $17. I tell ya … It’s easy to get used to having two market pros on your team. They sift through the news and alert you to the items that have the potential to spike stocks.
Frequently Asked Questions About Small-Cap Stocks
You’ve got more questions, and I have more answers. Let’s get into the super nitty-gritty.
Are Small-Cap Stocks Good?
For some traders, yes … For others, no. It depends on the size of your account, your trading plan, goals, and risk tolerance. While small-caps’ lower prices may be attractive to traders with smaller accounts, they may be riskier trades.
You must be ready. Start with your education right here on the STT blog. Or you can join the SteadyTrade Team where you get access to twice-daily webinars and a full archive of educational content. You don’t have to go it alone in the markets!
What Is the Best Small-Cap Stock?
There are many! It depends on your criteria. Use the list above as a starting point for a watchlist, and find the stocks that fit your trading plan and your trading goals.
Is It Better to Trade Small Caps or Large Caps?
Again, it’s all about your trading goals. Do you want to play it safer with stocks that may make smaller gains and losses over time? Or are you more interested in a higher risk/higher reward style of trading? You decide what fits you best — then focus on learning all you can about your go-to strategy.
Are Small-Cap Stocks Right for You?
If you aren’t sure if trading small-cap stocks is right for you, try paper trading first. Paper trading allows traders to gain market experience without risking their capital. It’s a way to develop your trading skills and gain confidence — without risking a dime…
Try it with your 14-day StocksToTrade trial for just $7! It includes a great paper trading feature.
Small-Cap Stocks: The Bottom Line
Trading small-caps isn’t for everyone.
Before you trade, be sure to understand your position, what you’re willing to risk, and what your trading goals are. Where will you set your stop … and what kind of order will you place with your broker? You have a lot of decisions to make every day as a trader — do your best to prepare for it all.
Always make a trading plan and stick to it. And know that you can always go at your own pace.
There’s a lot to consider when researching trading opportunities. Figuring out a company’s market cap is just one of them. Smart traders always look at the big picture … That’s what helps them find the top trading ideas.
When you’re starting out, it helps to have a team that keeps track of the market every day … like the SteadyTrade Team. You get hands-on mentorship twice a day, plus a great community to share ideas with. I hope to see you there!
What do you think of small-cap stocks? Do you trade them? Leave a comment below!