These 3 Small-Cap Stocks Are on a Rampage After CPI Report!

These 3 Small-Cap Stocks Are on a Rampage After CPI Report!

Hey Tribe!

The recent drop in U.S. inflation rates could lower discount rates on small-cap stocks, presenting valuable investment opportunities. These three small-cap stars are poised for impressive growth!

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U.S. Inflation Drops: A Boon for Small-Cap Stocks

At long last, price levels in the United States are settling. The U.S. April CPI report showed broad-based inflation at 3.4% and core inflation at 3.6%, down from March’s 3.5% and 3.8%. This decline supports a bullish outlook for the stock market, particularly for undervalued small-cap stocks. Lower inflation often translates into lower discount rates on future corporate earnings, boosting stock valuations.

The Russell 2000 has surged over the past five trading days, reflecting this trend. While lower implied discount rates are not the sole driver of stock prices, they are significant enough to spotlight these small-cap investment opportunities.

Let’s dive into the details of these promising small-cap stocks that are catching fire after the latest CPI news.

1.Limbach Holdings (LMB)

Limbach Holdings (NASDAQ:LMB) is an undervalued American construction and renovation company operating through two segments: General Contractor Relationships and Owner-Direct Relationships. Its services include mechanical, plumbing, building controls, and electrical work.

Limbach’s stock has soared by approximately 130% in the past year, driven by strong fundamental performance and strategic acquisitions. A notable example is its recent acquisition of Industrial Air for $13.5 million, which added $30 million in revenue potential and cross-sales synergies.

But that's not all—Limbach is known for its impressive growth-by-acquisition strategy, which has allowed it to expand rapidly and effectively. The company’s recent first-quarter earnings-per-share beat of 30 cents, combined with a price-to-earnings-growth ratio of 0.22x, positions LMB stock for continued success.

Fun Fact: Limbach’s projects include some of the most complex and large-scale mechanical systems in the country, like those found in hospitals and universities, showcasing their technical expertise. They even helped design and build the mechanical systems for the National Museum of African American History and Culture in Washington, D.C.

2.Aris Water Solutions (ARIS)

Water scarcity is a critical issue, creating both not-for-profit and for-profit opportunities. Aris Water Solutions (NYSE:ARIS) is poised to play a significant role in the commercial water recycling industry, particularly in the oil and gas sector. Its presence in the Permian Basin has led to sustainable net profitability within a decade of its inception.

Aris Water Solutions achieved $16.8 million in net income during its first quarter, with a net profit margin of approximately 16.25%. The company boasts a three-year compound annual growth rate of 33.13%, indicating substantial growth potential. With $324 million in available liquidity, Aris is well-equipped to expand its key verticals.

What makes Aris even more exciting is its commitment to sustainability. By recycling water in the oil and gas industry, Aris is helping to reduce environmental impact and promote responsible resource management.

Interesting Tidbit: Aris Water Solutions has already recycled enough water to fill over 25,000 Olympic-sized swimming pools, making a significant environmental impact. They also recently entered a partnership with a leading oil company to expand their water recycling capabilities, showing their industry influence.

3.Immersion Corporation (IMMR)

The haptic technology market is set for exponential growth, with Fortune Business Insights forecasting an annualized rate of 13.6% until 2030. Immersion Corporation (NASDAQ:IMMR) stands out as a best-in-class market participant in this sector, focusing on developing and licensing touch feedback technology.

Founded in the early 1990s, Immersion Corporation has a five-year compound annual growth rate of 18.16%, complemented by a favorable price-to-earnings ratio of 6.8x. The company is also debt-free, allowing shareholders full access to its residual book value.

Immersion Corporation recently exceeded its fourth-quarter earnings estimates, delivering a revenue beat of $2.16 million and an earnings-per-share beat of 36 cents. Trading above its 10-, 50-, 100-, and 200-day moving averages, IMMR stock is trending upward, making it an opportune time to invest.

Cool Fact: Immersion’s haptic technology is not just limited to smartphones and gaming devices—it’s also being integrated into automotive touchscreens, medical devices, and virtual reality systems, showing its versatility and broad application. They recently signed a deal with a leading automotive manufacturer to incorporate their technology into next-generation vehicle interfaces.

These three small-cap stocks are set to capitalize on the recent CPI-fueled rally, making them compelling additions to your investment portfolio. Dive in and discover the potential gains with Limbach Holdings, Aris Water Solutions, and Immersion Corporation!

Together, Next Level

Sean