Growth stocks continue to dominate the market, enticing investors to hunt for the last hidden treasures that might yield exponential returns without breaking the bank. Stocks priced under $5, though risky, have historically birthed colossal market giants, reminiscent of the fabled Magnificent Seven.
Against this context, three small-cap stocks stand out for having substantially outperformed their parent Russell 2000 Index (RUT) over the last month while maintaining share prices under $5. Analysts are singing their praises, showering them with “Strong Buy” ratings and foretelling further upside in the coming year.
1. SoundHound AI Stock
SoundHound AI (SOUN) is reshaping human-machine interaction with its cutting-edge voice recognition technology. Specializing in natural language processing, the company’s AI solutions aim to elevate conversational experiences across diverse applications.
The recent buzz surrounding SoundHound AI was sparked by Nvidia’s (NVDA) revelation of a $3.7 million stake in the company. Nvidia’s significant investment signifies a bullish outlook on the future of this small AI player.
Despite the recent surge that doubled SOUN stock in the past month, allowing investors to snag shares for under $4 each, the Russell 2000’s modest 2% increase pales in comparison.
SOUN’s latest earnings report showed revenue surpassing expectations but with a wider-than-anticipated loss of $0.09 per share. Looking ahead, the company anticipates turning adjusted EBITDA positive in Q4, with results scheduled for Feb. 29.
To propel growth, Soundhound is partnering with industry giants like Jersey Mike’s and White Castle to enhance its AI-based food ordering services, alongside collaborating with Turkish electric vehicle manufacturer Togg on a voice assistant.
All six analysts tracking SOUN have bestowed the stock with a “Strong Buy” rating. With a mean price target of $4.43, upside potential exceeds 12% from current levels.
2. Beyond Air Stock
Beyond Air (XAIR) aims to revolutionize the healthcare landscape with its innovative inhaled nitric oxide therapy geared towards addressing various respiratory and cardiac conditions. The game-changer? The LungFit platform, a state-of-the-art system delivering nitric oxide gas for patient inhalation.
After a prolonged decline in 2023, XAIR has bounced back in 2024, rallying 25% in the last month, surpassing the RUT index with ease.
In its latest earnings report on Feb. 12, Beyond Air reported a loss of $0.50 per share, surpassing analyst estimates of a $0.61 per share loss. The upbeat bottom-line performance compensated for a revenue miss, driving a surge in the stock price.
All four analysts covering XAIR have granted the stock a “Strong Buy” rating, with an average price target of $11.50. With shares trading below $2, that’s a staggering 553% premium from the current value.
3. Xeris Biopharma Stock
Xeris Biopharma (XERS) is disrupting the pharmaceutical sphere with its focus on developing injectable and infusible solutions.
XeriJect’s Rise Sparks Investor Excitement
An Innovative Approach to Drug Formulations
XeriJect is revolutionizing drug formulations with their user-friendly products that eliminate the need for complex preparation. By utilizing their proprietary technologies, XeriSol and XeriJect, they are simplifying the pharmaceutical landscape, offering improved stability and solubility compared to traditional aqueous formulations.
Market Response to XERS Performance
The market has responded positively to XeriJect’s advancements, propelling XERS shares to new heights. This surge can be attributed in part to a recent licensing agreement with Amgen (AMGN), which showcases the potential of their XeriJect technology. Over the past month, XERS stock has surged by more than 23%.
Financial Outlook and Analyst Sentiment
XERS recently reported impressive Q3 2023 results, exceeding expectations with a narrower loss of $0.09 per share and revenue of $48.32 million. Analysts project further improvement in Q4, anticipating a per-share loss of $0.09 (an improvement from $0.10 in the previous year) and revenue of $43.55 million.
With Wall Street analysts unanimously backing XERS with a “Strong Buy” rating, coupled with an average price target of $4.60, there is a prevailing bullish sentiment towards the company. This indicates a potential upside of nearly 53% from the current levels, further igniting investor optimism.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
