Despite experiencing one of the most robust periods of economic tightening in recent history, the United States economy has been demonstrating exceptional strength and resilience. This has ignited optimism that the world’s largest economy could achieve a smooth transition, often referred to as a “soft landing” by Jerome Powell. The concurrent decrease in inflation and stabilization of the labor market during the summer have bolstered the confidence of economists and Federal Reserve officials, suggesting that this elusive objective may finally be within reach. Given this outlook, it is the perfect time to look at small-cap stocks to buy that will explode in growth once the economy makes the “soft landing.” These companies are set to thrive based on their partnerships, product offerings, and strong year-over-year (YOY) growth in financials.
Digi International (DGII)
Digi International (NASDAQ:DGII) is first on the list of small-cap stocks to buy. The company creates hardware and software for the Internet of Things (IoT) and machine-to-machine connectivity products and services.
The global IoT industry is worth $330.9 billion in 2022 and is projected to grow at a 17.2% CAGR to $1,562.35 billion in 2032. Digi International reported an FYQ3 revenue of $112.24 million, which grew by 8.42% YOY, and an EPS of $0.79 which grew from its $0.54 last year.
Recently, Digi International has had many developments in its products. Earlier this year in June, the company announced the release of the latest version of its program Digi SkyCloud, providing users with tools to monitor, analyze, and control field data. The latest SkyCloud update enhances compatibility and integration with remote monitoring and control solutions, offering users greater flexibility and efficiency. This makes Digi International’s solution ideal for the industrial, environmental, and agricultural sectors.
Additionally, in April of this year, the company announced the release of a new service called Digi WAN Bonding. The service provides gigabit speeds to users to drastically improve network performance, as well as increase bandwidth, speed, reliability, and reduced costs. WAN Bonding will improve Digi International’s ecosystem, allowing products such as the Digi Remote Manager and Digi Accelerated Linux OS to operate at peak performance capabilities.
Yahoo! Finance reports 4 analysts that rated DGII stock as a “buy”, and they predicted a 1-year price range to be between $45.00 and $50.00, with a mean of $47.86. Digi International has recently seen a vast innovative development with its products, and the stock being down 22.30% year-to-date (YTD), it sits at an attractive entry point for investors to buy in on long-term growth.
Impinj, Inc. (PI)
Impinj, Inc. (NASDAQ:PI) is a radio frequency identification device and software company. Yahoo! Finance has 8 analysts predicting a 1-year price range on PI to be between $45.00 and $110.00, with a mean of $90.00.
The Radio Frequency Identification Devices (RFID) Industry is forecasted to be valued at $35 billion by 2030 from a 11.9% CAGR. This projected growth comes from industry developments, such as ultra-high frequency (UHF) tags. UHF tags give retailers the capability to read and record big data within seconds, powerfully improving operational efficiency.
Additionally, Impinj has strong financials. $85.7 million in revenue for Q2 2023 grew at a 1-year 43.8% CAGR, a 52% gross profit margin, and a $0.33 EPS that grew 200% YOY. Management exhibits a high competency level through $1.23 million in cash from financing growing 107.2% YOY, and $29 million in cash from investing which grew 229.2% YOY.
New developments and winning a lawsuit are all long-term growth catalysts for Impinj. Impinj is partnering with RFID manufacturer Tageos to implement its newly developed M800 series radio frequency identification inlay chips, improving the readability and reliability of tag devices that Tageos manufactures. Additionally, Impinj recently won $18.5 million from with NXP Semiconductors over infringement upon the intellectual property of the company’s RFID tagging technology. Retaining its intellectual property while also being awarded money from this lawsuit bolsters Impinj’s future growth prospects.
For those reasons in addition to having a relatively small market cap of $1.47 billion, Impinj is among the small-cap stocks to buy.
inTEST Corporation (INTT)
inTEST Corporation (NYSE:INTT) is a global supplier of innovative test and process solutions for use in manufacturing and testing in the aerospace and semiconductor market.
INTT stock is up 37.10% YTD. Specifically, inTEST is focused on the semiconductor industry, which is projected to grow at a 12.2% CAGR from $573.44 billion in 2022 to $1.38 trillion by 2029.
Further, inTest reported solid Q2 growth financials. Revenue of $32.6 million grew 10.2% YOY which beat expectations by $0.53 million, and a EPS of $0.28 beat expectations by $0.01. inTEST is on track to reach its 2025 revenue goal of $200 million to $250 million after its recently obtaining $19 million through the ATM equity offering.
Accordingly, analysts predict a large upside, with Yahoo! Finance reporting 2 analysts having a mean price target of $27.00 that ranges from $26.00 to $28.00.
Simultaneously, inTEST’s wholly-owned subsidiary recently partnered with Stellar Scientific, an equipment supplier focused on research and development. The partnership will provide customers with inTEST’s North Sciences Ultra-Low Temperature biomedical freezers and expand on market opportunities for it to serve the United States government agencies through Stellar’s U.S. GSA contract.
As a smaller company, inTEST’s diverse market demand places it in a great place for expansion and risk reduction. Its continuous strategic partnerships have poised the company for profitability and long-term growth.
On the date of publication, Michael Que did not have (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.
The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.