4 Small Cap Businesses Getting Stronger (Nobody is Talking About Them)

Small cap stocks rarely get any attention until they have doubled or tripled in price. That's why today I want to feature four under the radar stocks before the rest of the crowd catches on. They each have exciting earnings momentum stories and top ratings from our coveted quant ratings model that points to serious outperformance ahead. Stick around for the last stock. It's a 55-year-old company most everyone wrote off as a dinosaur, but they just posted a special quarter of earnings that has the smart money rushing in and probably we should follow their lead. Let's jump into our list of four stocks today with Motorcar Parts of America with a symbol MPAA. This is a unique player in the auto parts industry that may soon emerge as a much larger than its current 250 million market cap price. Before we get into the specifics on that stock, let me quickly introduce myself. I'm Steve Reitmister, but everyone calls me Righty. I've been investing for over 40 years and currently a partner at wallstreetzen.com where our quant rating system pinpoints the stocks with a high likelihood to outperform. And real quick, tap that like button now. It tells the algorithm to put more videos like this in front in the future. Back to Motorcar Parts. They take worn-out car parts, then rebuild them to like-new condition, and then sell them back into the repair market. This is a growth area because the high cost of new cars has led folks to hold onto their cars much longer, 12 years on average. This means more repairs, and this means more demand for their lower-priced parts. There is a fresh catalyst, too. Motorcar just pulled in a new brake business, adding capacity right as demand climbs. The benefit of this shows up in the current forecast [clears throat] for 48% earnings growth this coming year. Truly an exciting growth stock hiding in a very unexpected place. Wall Street rarely covers a stock this small, so it's good to see there's a sprinkling of top-rated analysts recommending the shares right now. No doubt more analysts will join the party as the growth story unfolds. Each new buy rating will act as a catalyst to push up shares, all to the benefit of early movers in the stocks, which might be us, right? Let's discover what the data in the Zen Ratings Quant Model has to say about these shares. Note the model runs every stock through a 115 factor review and boils it down into an intuitive letter grade of A through F. Indeed, A's are the best given their long history of outperformance. >> You'll also get a deeper dive into the stock's strengths and weaknesses with the seven underlying component grades, which look into specific areas like growth, value, momentum, and more. Motorcar Parts earns an elite Zen rating A. That is the highest possible rating amounting to a strong buy recommendation. Indeed, its fundamentals gleam like a car that just got waxed, putting the stock in the top 4% of all companies tracked in our model. As we take a deeper dive into the component grades, we start off with sentiment, which ranks in the top 20% of all stocks tracked. This is the smart money component, which considers things like our earnings estimate revisions, institutional money flows, analyst upgrades, and insider buying. Then we have a top 15% showing for AI factor. Now, a quick note on that one because it trips many people up. Our AI grade does not measure how much a company is involved with AI. Rather, it's our usage of AI to measure how likely the stock is to outperform based on patterns we find in the data. Then we have growth in top 14% all stocks and the standout grade is value, all the way up in the top 9% and that is based on 21 different measures of a company's value. Where it gets dinged a little bit is the safety grade, which is kind of middle of the pack, but as you might expect with a $250 million market cap company, it's going to be a little bit more volatile than the average stock, which is what the safety grade is showing. In the 48% let's consider the big picture. The aging of cars, the perfect trend for the company to capitalize on. This shows up in the 48% expected earnings growth and the Wall Street support and stellar fundamental profile is proven by the Zen Ratings grade of A. No doubt, this is a great under the radar stock to start off our video today. Before I keep going on to the next stocks, if you like timely market updates like this, then I strongly suggest you sign up for my next live training session this coming Monday. The focus is on timely market insights plus my top picks. Now, it's totally free, but you do need to sign up. Do that now to join me this coming Monday at 7:00 p.m. Eastern Time. Just go to wallstreetzen.com/live. Now, let's move the stock discussion from our garage to something with a little more firepower. I mean that in a literal sense cuz I'm about to talk about Smith & Wesson Brands with a simple SWBI. Yes, the famous gun company. Most people know the name from the civilian side. Uh Smith & Wesson also serves military and law enforcement customers around the world. Even though it's a well-known brand, it's not that large of a company at just 650 million market cap. Here's why it's an interesting story right now. The firearms industry spent the last few years working off a demand hangover after the pandemic surge. Companies like Smith & Wesson ran well below capacity sitting on too much inventory from the past. That phase is over with the demand on the rise and the factory ramping up back towards full production. That combination typically points to significantly higher profit margins going forward. This is already starting to show up in Smith & Wesson's current four-quarter earnings beat streak. Most impressive was their past quarter where they truly blew expectations out of the water. And the data from the Zen Rings model helps foreshadow more good times ahead. Indeed, we have another A-rated stock, but really it's more like A+ thanks to the fundamental profile that puts it in the top 1% of all stocks we track. As we take a tour of the component grades, uh things uh shape up quite nicely uh starting with value in the top 25% of all stocks. Growth is uh top 13%. That was one of the best grades to point to more earnings beats ahead. Things heat up a notch with the two different readings in the top 7%. That's for both sentiment and our AI timeliness grade. And the standout is the top 1% result for financial, which means they are a very well-run operation. The only soft spot is the middle-of-the-pack uh momentum grade, uh and that makes sense given that the stock had a significant run over the past year, then it's cooled off for the last few months. That last part is a benefit to anyone who picks up shares. Now, let's finish up strong with the investment case for Smith & Wesson. The Zen Ranks covers about 4,600 stock, yet this stock is actually the eighth highest rated stock overall. This greatly increases the odds of future share price performance. And now, a cherry on top is a nearly 4% dividend yield. Now, what's not to like about that? Quick ask before we go on to our next pick, if you are getting value out of this video, then hit that subscribe button. That's because I publish data-driven stock analysis like this every single week, and I would hate for you to miss out. Our third of four stocks today is Ituran location and control, the symbol of ITRN. Now, if you've never heard about them before, well, that's kind of the point of this video. Ituran runs vehicle telematics. In plain English, that means they put a device in your car that tracks it, recovers it if it gets stolen, and feeds data to drivers, fleets, and insurers. They are the market leader in Israel and across Latin America with millions of paying subscribers. And that word subscribers is why this stock is so darn attractive. It's truly a recurring revenue machine, given that it's a very sticky subscription that leads to compounding revenue and profits over time. Growth is always important, but value may be an even bigger part of the story. The discounted cash flow model on our site shows that Ituran is trading more than 45% below its estimated fair value. The stock is a little larger than the previous one at about 1 billion market cap, so not a surprise it has a little bit more Wall Street support. In fact, all three covering analysts are pounding the table with strong buy recommendations, each pointing to ample upside for shares in the year ahead. Once again, the Zen Ranks confirms the excitement in these shares with an overall A rating. That's because we have a truly splendid fundamental profile ranking in the top 2% of all 4,600 stocks we track. Now, it will come as no surprise to anyone that we have a strong cluster of component grades for this stock as well. Both growth and safety come in the top 25% of all stocks, then momentum brings it up a notch to the top 20%. Sentiment is top 19% saying that the smart money is already circling these shares. And then coming up the home stretch, it ramps all the way up to top 4% for the AI timeliness grade, and then top 3% for financial strength. The one thing to keep in mind, I trade does most of its business in Israel and Latin America. So it carries more geopolitical and currency risk than a company that sticks to just the US market. Now, that's a real consideration, and I want you to know that going into it. But when a stock scores this high in the S&P 500 models, and Wall Street is starting to take notice, then it looks like a coiled spring ready to jump higher. Three impressive stocks down, but one more to go. And I think you will agree that I truly did save the best for last. But before I get to that fourth stock, just one quick thing we need to do. If you want to step ahead of the market, then join me live every Monday at 7:00 p.m. Eastern time. That's when I share my updated market outlook and trading plan to outperform. This is also when I share my trade of the week based upon our proven S&P 500 quant model and my greater than 40 years of investing experience. Now, it's a free event, but you do need to register. Just go to wallstreetzen.com/live or click the link below in the description or scan the QR code that's shown up on your screen. Just pause the video for a moment. I'll be patient and wait for you, and then I look forward to seeing you on Monday. Here's something truly unique. A 55-year-old printing company, the kind of business everyone assumed was going extinct like dinosaurs, just posted a quarter so strong that people finally sat up and took notice. That company is Quad Graphics with a symbol of Quad right? With a market cap of only 530 million. Let's take it from the top. The company started in 1971 as a commercial printer. Catalogues, magazines, and the circulars that usually landed in your mailbox and your wastebasket, all right? But Quad has spent years quietly rebuilding itself into an integrated marketing company. Yes, print is still the base of what they do. But on top of that, they have layered on top of retail media, packaging, and a whole suite of data-driven marketing services. That reinvention is the growth driver and is finally showing up in their numbers. In their most recent quarterly report, we find their earnings jumped 70% year over year. This was way above expectations, which was rewarded by investors. Even better is realizing this is not a fluke as they have crushed earnings quite often over the past several quarters. And yes, we have to talk about the price action because shares are up about 80% in the past year. Gladly, there are four strong reasons we believe the shares will stay on the upswing in the months and years ahead. Now, number one is that earnings are forecast to grow three and a half times faster than industry average, right? Not a dinosaur after all. Number two is strong Wall Street support. Yes, we only have two analysts covering shares, but both are pounding the table strong buy recommendations and fair value targets well above current levels. Reason number three is on the value front where the PEG ratio comes in at only 0.48. Now, when you realize the average stock has a PEG ratio of 1.5, then it says that shares would need to triple to match the price of the average company. And finally, reason number four that these shares should continue to outperform is the stellar review from the SunTrust quant model. Like all of our stocks today, it's an A-rated stock. Now, that's given to the top 5% of all stocks after the full 115 fundamental factor review. In this case, it is not top 5%, it is not top 1%, it is top 0.1% of all stocks. Truly rarefied air, which historically has pointed to shares that greatly outperform the market. The component grades uh sing to this uh strength as well uh starting with value in the top 18% of all stocks. That's based upon 21 different measures of value. Growth top 17%. That's about consistency of growth that usually continues in the future. Financials top 14%. Momentum top 30%. Safety top 11% and the standout once again is sentiment at top 3%. Rarely a bad idea to follow the smart money into an under the radar stock like this one. The uh one honest knock on the company is that it carries a pretty heavy debt load. That is the reason this business struggled through the lean years. That hopefully improves as profits rise allowing them to actively pay down that debt. In my book, that one uh modest negative about debt does not overcome the four impressive positives I laid out for Quad, especially the incredible strength that Zen Ratings review which greatly increases the odds of future share price outperformance. So, there you have it. Four small caps all flying under the radar right now but ready to soar higher. Remember, small companies can move fast once the crowd finally catches on. So, if any of these stocks appeal to you, then it's wise to do your homework quickly to determine if these stocks have a rightful place in your portfolio. Also, remember the Zen Ratings are updated daily for over 4,600 stocks. So, always a good idea to base your decisions on the most up-to-date ratings that you can pull anytime our quote pages on wallstreetzen.com. Be sure to bookmark this site on your browser for frequent future visits. Now, I want to hear from you. Which of these four stocks is your favorite and why? And are there any other small caps you think I should feature in future videos? Please share your thoughts with our community in the comments section below. Hungry for more under the radar stocks? Well, then check out the video coming up in your screen now where I feature the four best growth stocks trading under $20 per share. Go watch it now.