Small-cap stocks might seem to be even riskier than usual right now.

The Federal Reserve delivered equity investors another killer blow last week, raising interest rates by another 75 basis points, forecasting much greater hikes in controlling inflation. In such challenging times, investing in small-cap stocks would seem like a puzzling move.

However, a report published by Bank of America back in May, showed that the Russel 2000 saw a 28% drop from peak prices in November compared to the 17% drop in the S&P 500.

It indicates that recessionary fears are already baked into the stock prices for small-cap firms. Moreover, it also points to the fact that large companies may be more vulnerable to future losses in the event of a recession.

Naturally, investors will gravitate towards large-cap stocks with stronger fundamentals and an incredible track record, while they shy away from the value of investing in small-cap stocks. These stocks typically have the same features as large-cap stocks but haven’t made it big in the stock market.

They have the potential for outsized gains in the future. Having said that, let’s look at seven small-cap stocks to wager on in the event of a stock market crash.

Gevo (GEVO)

Gevo (NASDAQ:GEVO)  is a renewable fuels operator that has been in the news of late for its milestone agreement with American Airlines (NASDAQ:AAL).

Gevo will supply the U.S. airline with 100 million gallons of sustainable aviation fuel (SAF). It plans to grow its portfolio by over 40% to cater to aircraft operators for a period of five years. These agreements are likely to result in over $2 billion in sales annually, propelling Gevo as one of the leaders in its niche.

Due to the unprecedented energy crisis, SAF is in the spotlight and likely to play a huge role in the future. Moreover, the increase in demand for SAF will lead to higher prices and greater margins for companies such as Gevo.

SunCoke Energy (SXC)

SunCoke Energy (NYSE:SXC) is one of the top coking coal miners operating in the Americas and Brazil.

The company experienced a massive surge in sales last year due to incredible operating conditions within the coal market. This year’s momentum has carried into its second-quarter results almost a 38% bump in sales. It also beefed up its 2022 adjusted EBITDA guidance from $240 million-$255 million to $ 270 million-$285 million.

Furthermore, its free cash flow yield is close to 20%, recently facilitating a 33% increase in dividend payouts. Though the market is expected to soften in the next few months due to recession risks, coal miners have performed significantly better compared to other mining companies during such a time.

Green Plains (GPRE)

Green Plains (NASDAQ:GPRE) is one of the top U.S.-based ethanol producers, looking to expand its competencies into high-value adding by-products.

The company is coming off a stellar year, where top-line growth exceeded 47%. Moreover, it continues to benefit from higher energy prices. Additionally, it has multiple new projects coming online that should help generate significant free cash flows and exploit various opportunities in the ethanol industry.

By 2024, the firm expects to generate more than $400 million in EBITDA with a turnaround in free cash flow numbers. Its growth strategy has much to do with generating new income streams by exploring new opportunities for its by-products.

It also is able to produce environmentally friendly and become significantly larger players in carbon capture and other projects resulting in new joint ventures with other enterprises further down the supply chain.

Vista Outdoor (VSTO)

Outdoor gear and shooting sports leader Vista Outdoor(NYSE:VSTO) is coming off its most successful year and is using that momentum to separate its business into two.

The two stand-alone publicly traded companies will specialize will separately, focusing on outdoor sports and the ammunition business.

Vista posted over $3 billion in sales last year, up a record 37% from the prior year. A sizeable chunk of those sales was attributable to new acquisitions it made to boost its customer base.

Its outdoor sports and ammunition business has grown remarkably over the past couple of years on the back of several acquisitions. The markets for both businesses are expected to remain strong for the foreseeable future on the back of multiple tailwinds. The sports and outdoor segment alone is estimated to grow at 13.29% from 2022 to 2025.

Tanger Factory Outlet Centers (SKT)

Tanger Factory Outlet Centers (NYSE:SKT) is a real-estate-investment-trust (REIT) operating open-air outlet shopping centers.

Unlike its peers, it’s arguably more resistant to inflation, considering how its property values remain stable.

Their outlet centers are popular among bargain hunters during an economic crisis such as the one we’re experiencing currently. Retailers charging full prices at malls usually unload left-over inventories at off-price outlet stores, attracting bargain hunters.

Tanger had a strong run last year, and its core metrics, including occupancy rates, funds from operations (FFO), and net operating income, came in remarkably positive overall.

In its recently released second-quarter results, its revenues of $105.8 million comfortably exceeded analyst estimates of $104.5 million, rising from $101.3 million in the same quarter last year. On top of that, SKT stock comes with a spectacular 5% yield, comfortably ahead of its peers.

Shutterstock (SSTK)

Shutterstock (NYSE:SSTK) is a tech company providing high-quality content and workflow solutions in the North American and European regions.

Over the years, it’s been a remarkably consistent business posting single-digit top-line growth over the past five years. Recent results haven’t been too shabby despite the challenges of the macroeconomic environment.

Shutterstock has done well to grow and find new applications in the fast-evolving imagery industry. It claims that more than 1 billion videos, images, and music tracks have been downloaded from the site.

Despite near-term troubles, it is growing its subscriber base at a healthy pace each quarter. In its second quarter this year, its subscribers increased by 15%, with a 7% improvement in revenue per download.

Brookdale Senior Living (BKD)

Brookdale Senior Living (NYSE:BKD) operates retirement homes across the U.S. and is one of the largest businesses in its niche.

It benefits from a long-term trend that is unlikely to slow down anytime soon, an aging U.S. population. Hence, it commands one of the best cases for small-cap stocks to buy for the long haul. Its fundamentals haven’t been too pretty, but its long-term bull case remains remarkably strong.

According to the Pew Research Center, the pace of boomer retirements has increased by a significant margin. Moreover, another report from Grandview Research forecasts a 5.5% increase in assisted living facilities from 2022 to 2030.

Also, the U.S. population of people 65 and above could rise to 95 million by 2060. A sizeable increase from 52 million in 2018. Hence,  Brookdale Senior Living is still early in its growth trajectory.

On the date of publication, Muslim Farooque 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.