3 Undervalued Small-Cap Stocks to Add to Your Must-Buy List

Noah Bolton

February 22, 2024 4 min read

Undervalued companies don’t always have to be stocks with a significant decline in their share price. There is an abundance of solid companies that have experienced growth and share price appreciation. However, they are still considered undervalued by analysts. This drove us to make our list of undervalued small-cap stocks.

Small-cap companies are also significant to consider investing in because they allow investors to take advantage of compound growth. This is true if the stock surges in price due to its greater inherent volatility compared to a larger company. Another benefit of small-cap stocks is that they tend to attract more investors. This is because they typically trade for an inexpensive price.

Below are a few companies that are great buying opportunities for investors looking for small companies with potential. They will make an excellent addition to anybody’s must-buy list.

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Sun Country Airlines (SNCY)

A Sun Country Airlines plane taking off.

Source: natmac stock / Shutterstock.com

Sun Country Airlines (NASDAQ:SNCY) operates as an airline service business transporting passengers and cargo in the United States and Latin America. Its fleet consists of 12 cargo, 42 passengers, and 6 leased Boeing 737-NG planes.

Over the last year, Sun Country has seen its share price fall by 19% over the previous year, primarily because of lower airfares and a disappointing earnings report for the second quarter.

Within this last month, SNCY has made quite a turnaround, and its share price has risen by 16%. Following, news of record levels of holiday travel and much improved third-quarter results beat analyst estimates. They reported revenue that increased by 8% compared to the previous year and adjusted earnings per share by 12 cents per share, topping predictions by eight cents per share.

Sun Country was beaten down by the market earlier last year but with increased passenger travel and its recent beat on earnings. SNCY has improved drastically recently and should be on investors’ watchlists.

Zymeworks (ZYME)

Brown glass pill bottle on its side showing white pills inside, with other pill bottles behind it representing MACK stock.

Source: shutterstock.com/Champhei

Zymeworks (NASDAQ:ZYME) is a biopharmaceutical company that develops cancer treatments. Five medications are in clinical trials, and a couple are in preclinical. ZymeWorks has also partnered with Johnson & Johnson (NYSE:JNJ), Merck (NYSE:MRK), and GSK (NYSE:GSK).

Zymeworks is still undervalued by analysts, even with its share price growing by 37% in the past year.

ZYME announced third-quarter earnings for 2023 that beat analysts’ estimates, with total revenue growing by over sixfold compared to the year before.

In other news, Zymeworks was added to the Nasdaq Biotechnology Index on Dec. 18. Furthermore, the recently announced acquisition of ImmunoGen (NASDAQ:IMGN) by AbbVie (NYSE:ABBV) has created a shift within the biotechnology industry, and most notably in companies that produce antibody-drug conjugates such as Zymeworks.

Zymeworks has grown sustainably in the last six months and offers investors a unique opportunity to buy into a company with decent upside potential within the biotech industry.

RCM Technologies (RCMT)

Image of a hospital with workers walking in the halls

Source: Shutterstock

RCM Technologies (NASDAQ:RCMT) is an industrial consulting company that participates in project management and engineering, healthcare staffing solutions, and life science technology.

On Nov. 9, RCMT reported earnings for the third quarter, stating that total revenue remained unchanged and net income rose by approximately 7% compared to the previous year. The total sales for its healthcare segment fell by 11%, the engineering segment saw an increase of 7%, and its life science and IT segments experienced growth of 16% within the same period, respectively.

After its recent earnings results, its stock price surged by 11%, mainly due to the company beating analysts’ predictions.

Over this past year, its share price has more than doubled, and it is still considered undervalued. Investors should put RMC Technologies at the top of their watchlist because it can continue its strong performance. It has solid fundamentals, and the following earnings report, which will be released in March, has a high likelihood of beating estimates. If you are looking for undervalued small-cap stocks, start here.

As of this writing, Noah Bolton did not hold (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.

Noah has about a year of freelance writing experience. He’s worked with Investopedia dealing with topics such as the stock market and financial news.