After the selloff we’ve seen all year, there are tonnes of stocks training undervalued. However, if you’re looking to get the most bang for your buck, small-cap stocks offer some of the best value, and, therefore, several small-caps are some of the best stocks to buy now.
In general, a company is considered a small-cap stock if its total market cap is between $300 million to $2 billion. So, as their name suggests, these stocks are much smaller than many other better known and more established businesses.
These companies are smaller, and, for a few other reasons, small-cap stocks typically offer better value than larger, more well-known stocks. In addition, they also tend to provide more long-term growth potential.
But because these stocks are smaller, the market views them as riskier than their larger peers, and, therefore, these stocks are more volatile. That’s one of the main reasons that these stocks typically offer better value and are some of the best to buy in this environment.
One of the main reasons small-cap stocks are riskier and more volatile is that these less-dominant businesses could struggle in economic slowdowns, especially compared to blue-chip stocks with highly diversified and robust operations.
Nevertheless, if you can find high-quality companies that you believe have years of potential and strong enough economics to weather a period of slower and potentially negative growth in the economy, then these small-cap stocks can be some of the best to buy.
So, while stocks are selling off, and there are plenty of attractive discounts across markets, here are two of the best small-cap value stocks to buy today.
One of the best small-cap value stocks to buy today
Ever since the pandemic hit, one of the best value stocks to buy, and one that continues to offer a compelling opportunity to investors today, is Cineplex (TSX: CGX).
Cineplex stock struggled over the last two years. However, that was almost entirely due to the pandemic and the impact it had on non-essential businesses like Cineplex.
And now, as the economy has finally opened back up and Cineplex can finally begin operating at capacity again, now it faces more headwinds from a slowing economy.
However, while Cineplex’s stock has struggled throughout 2022, losing more than 15% of its value, the company’s operations are recovering.
Sure, it may see some impact from inflation, such as tighter margins or a slight impact on its sales. However, considering where Cineplex is recovering from and how cheap its stock is already, it has to be one of the best stocks to buy today.
Even with inflation impacting the economy, analysts still expect Cineplex to have a strong recovery this year. And with its stock trading around $11.50, Cineplex has a forward enterprise value-to-EBITDA ratio of just 6.2 times, making it one of the best value stocks to buy today.
After more than two years of its operations and share price being significantly impacted, Cineplex has a long way to go to recover and offers tonnes of potential over the coming years.
A high-quality growth stock that’s been growing rapidly by acquisition
In addition to Cineplex, another one of the best small-cap value stocks to buy now is Park Lawn (TSX: PLC).
Park Lawn is a slightly larger company, with a market cap of $1.1 billion vs. Cineplex’s $700 million valuation. However, given the success that it’s had growing by acquisition in the past and the fact it’s still a small-cap stock, Park Lawn is one of the best investments you can make today.
The company operates in the death care industry, owning cemeteries, crematoriums, funeral homes and more.
So, not only does it offer the excellent long-term potential to continue growing rapidly, but much of its sales and operations will be robust and reliable, as death care is highly defensive.
Plus, considering the stock has sold off by roughly 25% from its high, Park Lawn offers investors attractive value at these prices.
If you’re looking for small-cap stocks that offer tonnes of value and that you can buy and hold for years, Park Lawn is one of the best to consider.
