4 Small Cap Stocks That Brokers Love Right Now

The U.S. labor market has shown a decent recovery in the past few months and the inflation level is no longer a concern, but there is still a widespread debate regarding the overall health of the U.S. economy. As a result, the hike in interest rates is not expected to be a smooth affair.

Deteriorating infrastructure, rising income inequality, elevated pension and medical costs, large current account and government budget deficits are causes of concern. Further, any improvement on the global growth front is yet to be seen. Nonetheless, household spending is likely to continue boosting the U.S. economy on the back of a buoyant consumer confidence, solid employment and faster wage growth.

Weak investment levels continue to hamper growth, which is in turn is leading to lower productivity. Thus, the combination of rising wage levels and low productivity will likely pose a threat to profitability of corporates in the coming quarters. In fact, based on these concerns, the International Monetary Fund lowered its outlook for the U.S. economic growth rate by 0.2% to 2.2%, in its latest global outlook.

In such a scenario, it becomes difficult for investors to pick right stocks. A basic analysis solely based on a stock’s fundaments may not be sufficient to take an investment decision on it. Hence, one can rely on broker recommendations. Brokers have a deeper understanding of the impact of economic developments on the stocks and the sectors, so their advice should lead to better returns. Also, an average of all broker recommendations provides the most likely picture of the stock’s future.

4 Broker-Favorite Small Cap Stocks to Buy Now

We have shortlisted four broker-favorite small cap stocks from four different sectors with the help of Zacks stock screener. For these stocks, which have a market capitalization of less than $1 billion, more than 85% of the covering brokers have a bullish stance. These four stocks also carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Moreover, these stocks have a VGM Score of ‘A’. Our research shows that stocks with a VGM Score of ‘A’ or ‘B’ when combined with a Zacks Rank #1 or 2 (Buy) offer the best upside potential.

Argan, Inc. (NYSE:AGX) , headquartered in Rockville, MD, through its wholly owned Southern Maryland Cable, Inc. subsidiary, provides inside premise wiring services to the federal government and also provides underground and aerial construction services and splicing to major telecommunications and utilities customers.

Number of Brokers that Rated the Stock: 2

Brokers with Buy Recommendation: 100%

Market Cap: $766.52 million

Ducommun Inc. (NYSE:DCO) manufactures components and assemblies, principally for domestic and foreign commercial and military aircraft and space programs. Ducommun is a subcontractor to Lockheed Martin (NYSE:LMT) on the Space Shuttle external tank and is a supplier of components for the Space Shuttle, as well as for the International Space Station. Ducommun is based in Carson, CA.

Number of Brokers that Rated the Stock: 3

Brokers with Buy Recommendation: 100%

Market Cap: $246.57 million

Headquartered in Bethesda, United States, Enviva Partners, LP (NYSE:EVA) is a master limited partnership which owns and operates wood pellet production plants. It serves primarily in the United States and Europe.

Number of Brokers that Rated the Stock: 2

Brokers with Buy Recommendation: 100%

Market Cap: $310.25 million

Horizon Global Corporation (NYSE:HZN) is a designer, manufacturer and distributor of towing, trailering, cargo management and accessory products for original equipment, aftermarket and retail customers. Horizon Globalis headquartered in Troy, MI.

Number of Brokers that Rated the Stock: 3

Brokers with Buy Recommendation: 100%

Market Cap: $337.48 million

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