2019 is almost over, and while some investors are reflecting on a successful year, others are scrambling to add value to their portfolio before the year wraps up. If you didn’t capitalize on the stock market’s all-time highs in 2019, fear not, next year is looking very promising for small cap stocks as well.
December is often a good time to pick up stocks at a discount price, especially if you believe in the January Effect.
Small cap stocks offer investors serious potential because they have much more room to grow compared to their large-cap counterparts. But, which companies offer the most potential upside?
Here are the five top small-cap stocks to watch before the end of the year.
1. Aimmune Therapeutics
Aimmune Therapeutics (NASDAQ:AIMT) is a biopharmaceutical company that is focused on developing treatments for potentially life-threatening food allergies like peanuts, tree nuts, and eggs. The company’s lead candidate is AR101 (potential trade name PALFORZIA), a complex, biologic oral immunotherapy (OIT) drug designed to reduce the incidence and severity of allergic reactions, including anaphylaxis, when a child or teenager is exposed to peanuts.
In September, PALFORZIA gained support from the Allergenic Products Advisory Committee (APAC), bringing it one step closer to being approved by the US Food and Drug Administration (FDA). Moving from a research-based company to a commercial drug company would significantly boost Aimmune Therapeutics’ revenue and allow the company to fund future R&D for other potential drug candidates.
Aimmune Therapeutics faired pretty well in 2019, increasing 15% from $24.34 USD to $27.99 USD, and could see even bigger gains in 2020.
2. Axsome Therapeutics Inc.
Another winning biotech small cap stock that has had an absolutely outstanding year and is showing no sign of stopping is Axsome Therapeutics Inc. (NASDAQ:AXSM). The biopharmaceutical company develops drugs for central nervous system disorders.
Axsome has seen its share price skyrocket an astounding 1,344.4% since the beginning of the year, going from $2.68 USD to $38.71 USD since January. The main reason for the company’s success is the very promising results from phase 2 trials of its AXS-05 for major depressive disorder (MDD). The results saw 47% of patients with MDD achieve remission compared to just 16% of patients who used bupropion alone.
The exciting thing is, if this drug reaches the market, it could generate $1 billion in annual sales in just a few years. Axsome is also running a phase 3 study for AXS-07, a drug that combines well-known migraine headache drugs, which could mean another major breakthrough for the company in 2020.
3. iRobot Corporation
The world is shifting more and more towards innovative technologies to make our day-to-day lives easier, meaning small cap stocks in this category could have a very promising future. One company that is already well-known for its robotic household devices is iRobot Corporation (NASDAQ:IRBT).
Now, the maker of the Roomba and Braava is in the process of launching the Terra robotic lawnmower and also recently developed an education-oriented coding robot called Root, which helps teach children how to code.
iRobot’s stock has had a particularly tough year, dropping a massive 44.13% since the start of 2019. The company said in September that the US-China trade war was partly to blame for its lowered full-year financial guidance. If the trade war gets resolved, iRobot will likely see its business pick back up, meaning investors might consider its discounted price a perfect pickup.
4. Ping Identity Holding Corp.
Ping Identity Holding Corp. (NYSE:PING) is one of the newer small cap stocks on our list, but the company has already made a name for itself. The user identity management company IPO’d on the Nasdaq in September and experienced a 25% jump on its market debut day, giving Ping a $1.46 billion USD market value right out of the gate and netting the company almost $188 million USD.
Then, in November, the company announced that its Ping Intelligent Identity platform customers experienced a new set of scale and performance benchmarks. It seems that this is only the beginning for Ping, which is cashflow positive and poised for growth in 2020.
By end of day November 27, 2019, Ping Identity was up 3.23% at $22.03 USD, which is 46.87% higher than its IPO price.
5. Charlotte’s Web Holdings Inc.
Pot stocks have had a particularly tough year, with industry giants Canopy Growth Corp. (TSX:WEED) (NYSE:CGC) and Cronos Group (TSX:CRON) (NASDAQ:CRON) seeing significant drops in their share price.
And it seems that 2020 may result in much of the same due to several factors. Still, there are a couple of small cap stocks that offer a bright spot in the gloomy pot market. One of these is Colorado-based CBD company Charlotte’s Web Holdings (TSX:CWEB) (OTCQX:CWBHF).
CWEB raked in $25.1 million in the third quarter of 2019, which represents a 41.8% increase in organic revenue year-over-year. According to Charlotte’s Web CEO Deanie Elsner, the company expects full-year revenue for 2019 to be between $95 to $100 million, which is roughly 30% more than $74 million in 2018.
The company also surpassed 9,000 stores that carry its products, launched several new products, and expanded into new states and locations through new and current retail partners.
By end of day November 27, 2019, Charlotte’s Web stock was up 5.05% to $9.78 USD on the OTC. The company is down just over 17% for 2019; however, several analysts expect the stock to rebound. In fact, eight analysts covering Charlotte’s Web offered the company an average price target of $13.10 USD, with six offering a “buy” recommendation, while the remaining two suggest investors “hold” onto the stock.
Are there any small cap stocks on your radar that we should know about? Let us know in the comments!
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