5 Top Small-Cap Stocks to Buy in September

The major benchmark indexes Nasdaq Composite and S&P 500 closed at all-time highs on Friday after Fed Chairman Jerome Powell signaled that the central bank would start bond tapering this year. Also, the central bank does not intend to hike interest rates in the near term. The Fed believes that the economy is recovering with a significant improvement in employment and record GDP growth. This, along with the expected continuation of the low-interest-rate environment, should benefit small-cap stocks.

Investors’ interest in the small-cap stocks is evident in the iShares Core S&P Small-Cap ETF’s (IJR) 4.5% returns over the past month compared to the iShares Core S&P 500 ETF’s (IVV) 2.6% gains. 

We think the expanding market reach of small-cap companies USANA Health Sciences, Inc. (USNA), EnPro Industries, Inc. (NPO), Marcus & Millichap, Inc. (MMI), Hollysys Automation Technologies Ltd. (HOLI), and Standex International Corporation (SXI) should help them capitalize on the rising consumer demand in a recovering economy. So, their stocks are expected to deliver solid returns in the coming months.

USANA Health Sciences, Inc. (USNA)

With a market capitalization of $1.95 billion, USNA in Salt Lake City, Utah, develops, manufactures, and sells science-based nutritional and personal care products. The company offers materials and online tools to assist associates in building their businesses, as well as in marketing products.

In an announcement on  July 14, USNA said it had  become the official nutritional supplement supplier of USA Skateboarding (USAS), the national governing body for skateboarding in the United States. By providing USAS team members with its NSF Certified for Sport and LGC Informed-Choice tested products, USNA is looking forward to expanding its market reach.

On May 21, USNA and its BabyCare, Ltd. subsidiary in China collaborated with the Beijing University of Chinese Medicine (BUCM) to cooperatively research the field of traditional Chinese medicine (TCM). USNA is hoping to bring together modern nutritional science and TCM to its product portfolio to  help improve the health and wellness of consumers.

USNA’s net sales increased 30.1% year-over-year to $336.84 million in its fiscal second quarter, ended July 3, 2021. The company’s gross profit was $279.82 million, up 32.4% from the prior-year period. Its earnings from operations have been reported $53.72 million for the quarter, representing 35.7% increase from the prior-year period. While its net earnings increased 36.7% year-over-year to $38.23 million, its EPS increased 41.7% year-over-year to $1.87. As of July 3, 2021, USNA had $265.37 million in cash and cash equivalents.

Analysts expect USNA’s EPS to increase 2.8% year-over-year to $1.48 in the current quarter, ending September 30, 2021. A $307.40 million consensus revenue estimate for the current quarter reflects a 3% increase year-over-year. USNA surpassed the Street’s EPS estimates in three of the four trailing quarters. The stock’s EPS is expected to grow at a 15% rate per annum over the next five years. The stock has gained 27.4% in price over the past nine months to close Friday’s trading session at $97.66.

USNA’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

USNA has an A grade for Value and Quality, and a B grade for Stability. In the B-rated, 11-stock Medical - Consumer Goods industry, it is ranked #2.

To see additional POWR Ratings for Growth, Momentum, and Sentiment for USNA, click here.

EnPro Industries, Inc. (NPO)

NPO in Charlotte, N.C. designs, develops, manufactures, markets and services engineered industrial products worldwide. The company offers sealing, metal-polymer bearing, air compressor systems, vacuum pumps, diesel and natural gas engines, and specialized tooling worldwide. It has a market capitalization of $1.80 billion.

As part of its business portfolio transformation, NPO launched a global rebrand to “Enpro” and adopted a new corporate logo on March 29, 2021. NPO’s new brand identity underscores its commitment to delivering highly engineered products and services that provide differentiated performance derived from materials science expertise, manufacturing know-how, and trade secrets.

On February 4, NPO realigned its reporting segments to be Sealing Technologies; Advanced Surface Technologies; and Engineered Materials, as part of its ongoing portfolio reshaping strategy for growth within the semiconductor, life sciences, and other technology-enabled markets. NPO hopes this new reporting segmentation will  align its technical and operational expertise and enable better performance measurement, decision making, and transparency for investors.

In the fiscal second quarter, ended June 30, 2021, NPO’s net sales increased 20.9% year-over-year to $298.60 million. The company’s gross profit came in at $117 million, up 41.8% from the prior-year period. Its operating income increased 1672.2% year-over-year to $31.90 million. Its adjusted net income from continuing operations came in at $32.40 million, up 80% from the prior-year period, and its  adjusted EPS increased 77.3% year-over-year to $1.56. The company had $261.90 million in cash and cash equivalents as of June 30, 2021.

A $1.26 consensus EPS estimate for the current quarter, ending September 30, 2021, reflects an 88.1% improvement from the prior-year period. Likewise, the $270.97 million consensus revenue estimate for the current  quarter indicates a marginal rise from the year-ago period. Also,  NPO has an impressive earnings history; it topped consensus EPS estimates in all four trailing quarters. NPO’s EPS is expected to grow at a 5.1% rate per annum over the next five years. Over the past six months, NPO has gained 8.6% in price to close Friday’s trading session at $87.26.

NPO’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which translates to Strong Buy. In addition, NPO has an A grade for Sentiment, and a B grade for Growth and Stability. It is ranked #18 of 91 stocks in the B-rated Industrial - Equipment industry.

In addition to the POWR Rating grades I’ve highlighted, one can see NPO ratings for Value, Momentum, and Quality here

Click here to check out our Industrial Sector Report for 2021

Marcus & Millichap, Inc. (MMI)

With a $1.56 billion market cap, Calabasas, Calif.-based MMI is an investment brokerage company that provides real estate investment brokerage and financing services to sellers and buyers of commercial real estate in the United States and Canada. The company provides research, advisory, and consulting services to developers, lenders, owners, real estate investment trusts, high-net-worth individuals, pension fund advisors, and other institutions.

MMI sold the Skandia Mobile Country Club, a 167-unit mobile home complex in Huntington Beach, California, for $58 million on August 26, 2021. Also, MMI’s Institutional Property Advisors (IPA) division sold Capella at Rancho del Oro, a 284-unit multifamily asset in Oceanside, California, for $110 million on August 16. The brokerage firm expects to capitalize on the red-hot housing market in California.

MMI’s total revenues for the second quarter, ended June 30, 2021, increased 142.7% year-over-year to $284.95 million. The company’s operating income came in at $41.61 million for the quarter, versus a  $2.61 million loss from the same period last year. Its net income increased 29647.2% year-over-year to $31.53 million. Its EPS has been reported at $0.78 for the quarter, and as of June 30, 2021, the company had $230.41 million in cash and cash equivalents.

Analysts estimate the stock’s EPS to be $0.40 for the current quarter, ending September 30, 2021, representing a 166.7% rise from the prior-year period. The $220.30 million revenue estimate for the current quarter indicates a 38.9% year-over-year improvement. Also, the company beat the Street’s EPS estimates in each of the trailing four quarters. MMI’s EPS is expected to grow at a 6% rate  per annum over the next five years.

MMI has gained 37.9% in price over the past year and 3.8% over the past month. It ended Friday’s trading session at $39.30.

It’s no surprise that MMI has an overall A rating, which translates to Strong Buy in our POWR Ratings system. In addition, the stock has a B grade for Growth, Sentiment, Momentum, and Quality. It is ranked #2 of 46 stocks in the Real Estate Services industry.

Click here to see additional POWR Ratings for MMI.

Hollysys Automation Technologies Ltd. (HOLI)

Headquartered in Beijing, China, HOLI provides industrial automation and control systems and products. The company serves industrial, railway, subway, nuclear power, and mechanical and electronic industries. In addition, it offers research and development, mechanical and electrical solutions, and installation services. It has a market capitalization of $1.26 billion.

For its  fiscal third quarter, ended March 31, 2021, HOLI’s total net revenues increased 36.1% year-over-year to $109.91 million. The company’s gross profit came in at $41.10 million, up 66% from the year-ago period. Its income from operations came in at $17.37 million for the quarter, representing a 51.9% increase from the prior-year period. While its non-GAAP net income increased 34% year-over-year to $18.68 million, its non-GAAP EPS improved 34.8% to $0.31. As of March 31, 2021, HOLI had $466.08 million in cash and cash equivalents.

Analysts expect HOLI’s EPS to come in at $1.69 for the current year, indicating a 28% growth year-over-year. The $568.99 million consensus revenue estimate for the current  year reflects a 13.1% improvement from the same period last year. The stock’s EPS is expected to grow at a 15.8% rate over the next five years.

HOLI has gained 90.5% over the past year and 38.9% over the past month. It closed Friday’s trading session at $20.54.

HOLI’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.

The stock has an A grade for Sentiment, and a B grade for Growth and Value. Click here to see the additional ratings for HOLI (Quality, Stability, and Momentum).

HOLI is ranked #10 of 91 stocks in the  Industrial - Equipment industry.

Standex International Corporation (SXI)

SXI manufactures and sells various products and services for diverse commercial and industrial markets internationally. The Salem, N.H., company operates through five segments: Electronics; Engraving; Scientific; Engineering Technologies; and Specialty Solutions. Its products include food merchandising and display cases, reusable and expendable space launch vehicles, and magnetic components and connectors. It has a market capitalization of $1.22 billion.

OFIX’s net sales for its fiscal fourth quarter, ended June 30, 2021, increased 26.6% year-over-year to $176.44 million. The company’s gross profit came in at $65.81 million, representing a 40.3% year-over-year improvement. Its adjusted income from operations has been reported at $23.50 million for the quarter, up 94% from the prior-year period. SXI’s adjusted net income came in at $17.06 million, representing a 113.3% increase from the prior-year period, and its  adjusted EPS increased 115.4% year-over-year to $1.40. As of June 30, 2021, the company had $136.38 million in cash and cash equivalents.

For the current quarter, ending September 30, 2021, analysts expect SXI’s EPS to be $1.28, up 33.6% from the prior-year period. It surpassed the Street’s EPS estimates in each of the trailing four quarters. A $171.41 million consensus revenue estimate for the current quarter represents a 13.3% rise from the prior-year period. Analysts expect SXI’s EPS to grow at a 10% rate per annum over the next five years.

SXI gained 69.6% in price over the past year and 9% over the past month. It ended Friday’s trading session at $99.48.

SXI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system.

The stock has a B grade for Value, Growth, Sentiment, and Quality. We also have graded SXI for Stability and Momentum. Click here to access all SXI’s ratings.

Of the 91 stocks in the B-rated  Industrial - Equipment industry, SXI is ranked #5.

Click here to check out our Industrial Sector Report for 2021

USNA shares were trading at $96.94 per share on Monday afternoon, down $0.72 (-0.74%). Year-to-date, USNA has gained 25.73%, versus a 21.88% rise in the benchmark S&P 500 index during the same period.

Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.

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