Why should you consider these small-cap gems? Firstly, the growth potential they offer is unmatched. Small-cap stocks have the agility to swiftly respond to market shifts and capitalize on emerging trends, making them a prime ground for exponential growth. Secondly, they often operate in niches that larger companies may overlook, providing investors with the chance to tap into underexplored markets. This diversification can serve as a shield against market volatility and bolster your portfolio’s resilience.
Moreover, these carefully selected small-cap stocks boast a track record of prudent financial management. This is crucial, as disciplined financial strategies contribute to long-term sustainability. As you explore this watchlist, you’ll realize that these stocks stand out not just in the realm of small-caps but within the broader market landscape.
York Water (YORW)
Operating relatively under the radar, this water utility company serves nearly 50 municipalities in the south-central region of Pennsylvania, offering essential clean water and wastewater services. Its remarkable history spans over two centuries, consistently maintaining its dividend-paying track record for just as long.
For investors seeking a small-cap offering reliability, York Water presents an alluring proposition. While its growth stems partially from customer acquisition, revenue primarily increases due to regulated rate adjustments. These rate hikes are widely supported given the essential nature of water services – a commodity no one can do without.
As a responsible steward of its earnings, York continually reinvests in its infrastructure to ensure top-notch service quality. This approach lends its growth a steadiness that sets it apart from the volatility often associated with electric utilities.
York Water isn’t a stock for quick riches; it’s a long-term investment choice. Nonetheless, the company shines as a solid entity, boasting superior gross, operating, and net margins when compared to other players in the water utility sector. So, if you’re on the lookout for an unwavering dividend generator to fortify your small-cap portfolio, York Water stands as a compelling contender worth considering.
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Workhorse Group (WKHS)
Workhorse Group specializes in producing electric delivery vans and trucks tailor-made for last-mile delivery services. The company offers an array of battery-electric van models, each with distinct payload capacities and capable of traveling up to 150 miles on a single charge. Notably, their product line includes the HorseFly and Falcon, revolutionary drone delivery systems that have captured industry attention.
Throughout 2022, Workhorse made significant strides by delivering 33 electric vans, a trend it aims to amplify in 2023. However, it’s worth considering the context of the revenue forecast for the current year, which stands between $75 million and $125 million. In the small-cap space, such lofty revenue estimates often lean towards the optimistic side, and this has been evident in the company’s performance so far this year. As of the first half of 2023, Workhorse has only managed to deliver 52 electric vans, leading to a revenue of around $5.7 million. While this revenue figure falls short of expectations, it’s important to highlight the remarkable year-over-year growth that Workhorse has exhibited. These factors collectively position Workhorse as a promising small-cap electric vehicle (EV) stock to consider adding to your portfolio.
Intriguingly, Workhorse might well be on the radar of larger EV firms looking to venture into the thriving electric delivery vehicle market. Likewise, logistics and e-commerce companies aiming to optimize their delivery operations and reduce environmental impact could find Workhorse an attractive acquisition prospect.
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Rocket Lab (RKLB)
Small-cap space company Rocket Lab distinguishes itself with its robust financial standing, a rarity among smaller players in the space industry. Recent earnings reflected a noteworthy 12% year-over-year increase in revenue, while the addition of a $40 million contract backlog further underscores the company’s growth trajectory and financial resilience.
The launch services specialist has reached a significant milestone by successfully reusing an engine from a previous flight in its August 23rd rocket launch. This achievement marks a decisive stride toward Rocket Lab’s goal of achieving complete booster reusability across multiple launches. This advancement not only promises to accelerate Rocket Lab’s launch cadence but also stands to considerably curtail manufacturing expenses.
Concurrently, the company is tantalizingly close to achieving its post-launch barge landing target, a strategic move that holds the potential to streamline operations and bolster cost efficiency. The recent acquisition of Virgin Orbit’s dormant facility has propelled Rocket Lab even closer to realizing these aspirations, firmly establishing it as a space stock to consider adding to your portfolio.
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