Some investors prefer to target small-cap stocks, as their growth potential is undoubtedly hard to ignore.
After all, don’t we all dream of getting in early on the next big thing?
Of course, it’s critical for investors to realize the higher volatility nature of small-caps, as they are less liquid and more sensitive to monetary policy.
For those interested in the idea, two small-caps – Heritage Insurance (HRTG – Free Report) and EZCORP (EZPW – Free Report) – sport favorable growth profiles paired with positive Zacks Ranks. Let’s take a closer look at each.
EZCORP Reports Record Sales
EZCORP, a current Zacks Rank #1 (Strong Buy), establishes, acquires, and operates pawnshops that function as convenient consumer credit sources and value-oriented specialty retailers of previously owned merchandise.
The outlook for the company’s current fiscal year has remained positive, with the $1.13 Zacks Consensus EPS estimate up nearly 40% over the last year and suggesting 22% Y/Y growth.
Image Source: Zacks Investment Research
Quarterly revenue of $280 million throughout its latest period reflected a Q2 record, with same-store sales growth of 3% throughout the period reflecting healthy continued demand. Below is a chart illustrating the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
HRTG Sees Big Profit Boost
Heritage Insurance, a current Zacks Rank #1 (Strong Buy), is a property and casualty insurance holding company that provides personal residential insurance for single-family homeowners and condominium owners through its subsidiary.
The company’s outlook has shifted positively in a big way across the board.
Image Source: Zacks Investment Research
Big growth was reported throughout its latest period, with EPS improving 90% year-over-year alongside a 10% sales increase.
The company enjoyed a favorable quarter overall, with gross premiums earned climbing 6% year-over-year alongside a notable improvement (55.7% compared to 60.3% prior) in its net loss ratio. Simply put, the company has continued to build its top line while also reducing the amount lost from claims.
Below is a chart illustrating the company’s sales on a quarterly basis.
Image Source: Zacks Investment Research
Bottom Line
Small-caps are commonly targeted thanks to their explosive growth profiles, though it’s critical to note that they’re generally more volatile than an established large-cap stock, for example.
And concerning those with bright outlooks, both stocks above Heritage Insurance (HRTG – Free Report) and EZCORP (EZPW – Free Report) – fit the criteria nicely, with each boasting positive growth expectations paired with favorable Zacks Ranks.
