RBC Capital: The 7 Best Small-Cap Stocks With Big Upside Potential

Much of the media attention is focused on a few big-name mega cap stocks that dominate the market. But for investors looking to diversify their portfolios and consider new opportunities, these high conviction small cap stocks provide some interesting investing ideas. We took these stocks from RBC Capital’s recently released list of small cap stock picks. These are the best investing ideas in the small cap space, all with less than $3 billion of equity market value and notable upside potential. You can click the stock tickers to delve deeper into the stock’s overall outlook from the Street.

Which are the top small cap ideas that you should be tracking?

1. Proofpoint Inc (NASDAQ:PFPT)

This cybersecurity company protects people, data, and brands from today’s advanced threats and compliance risks. The stock also has the backing of top RBC Capital analyst. Hedberg has a very strong track record on PFPT stock specifically (89% success rate and 29% average return across 19 ratings).

PFPT represents a “a relatively open-ended opportunity as revenue represents ~1% of estimated worldwide market opportunity in 2017E” says Hedberg. He also notes that PFPT has a “solid growth profile” and “a strong and evolving product portfolio to meet customer demand and take share from incumbents.”

The analyst has a $103 price target on PFPT which means 14% upside potential from the current share price. Note also PFPT also has a Strong Buy analyst consensus rating.

2. Five Below, Inc. (NASDAQ:FIVE)

For those of you who haven’t heard of FIVE, look out. This discount chain claims to be one of the fastest-growing retail stores with over 500 stores across 32 states. Aimed at teens and pre-teens, all the products are priced at under $5. One fan of the strategy is Scot Ciccarelli who recently raised his FIVE price target from $50 to $57 (14.3% upside). He says: “The low price point not only affords the company some defense against e-commerce cannibalization, but more importantly, the affordability of the products offered empowers its young target demographic to shop both with their parents and independently.”