Editor’s Note
This article highlights the current market optimism driven by strong economic data and explores the potential for significant growth within the small-cap sector, where diligent investors may find overlooked opportunities.
As February 2026 unfolds, the U.S. stock market is experiencing a robust start with major indices like the Dow Jones Industrial Average and S&P 500 climbing significantly higher, driven by positive economic indicators such as an unexpected expansion in manufacturing activity. Amidst this optimistic backdrop, investors are keenly searching for overlooked opportunities within the small-cap sector, where undiscovered gems can offer substantial growth potential when aligned with strong fundamentals and favorable market conditions.
Greene County Bancorp, Inc. serves as a holding company for The Bank of Greene County, offering a range of financial services across the United States with a market capitalization of $399.11 million. Its primary revenue stream is its banking operations, generating $82.60 million.
Greene County Bancorp, with assets totaling $3.1 billion and equity of $258.3 million, stands out for its robust financial health. The bank’s liabilities are primarily low-risk, with 91% sourced from customer deposits rather than external borrowing. Total deposits amount to $2.6 billion against loans of $1.7 billion, ensuring a sound balance sheet structure. Its net interest margin is 2.5%, complemented by a sufficient bad loan allowance at 0.2% of total loans, reflecting prudent risk management practices. Earnings growth has been impressive at 38.8%, significantly outpacing the industry average of 19.6%. Trading below estimated fair value by 27%, it presents an intriguing opportunity for investors seeking value in smaller financial institutions.
Waterstone Financial, Inc. is a bank holding company for WaterStone Bank SSB, offering a range of financial services in southeastern Wisconsin with a market capitalization of $343.37 million. Waterstone derives its revenue primarily from mortgage banking ($80.11 million) and community banking ($63.21 million). The company’s net profit margin exhibits notable fluctuations, which may impact overall profitability.
Waterstone Financial, with total assets of US$2.3 billion and total equity of US$349.4 million, showcases a solid foundation in the financial sector. The company has a healthy net interest margin of 2.7% and maintains an appropriate bad loans ratio at 0.3%, reflecting its robust risk management practices. Over the past year, earnings surged by 41.3%, outpacing industry growth rates significantly, while its price-to-earnings ratio stands attractively at 13x against the broader market’s 19x average. Recently, Waterstone completed a share buyback program repurchasing over 18% of shares for US$45 million, indicating strong confidence in its valuation prospects.
IDT Corporation, along with its subsidiaries, offers communications and payment services across the United States, the United Kingdom, and internationally, with a market capitalization of approximately $1.22 billion. IDT generates revenue primarily from its Traditional Communications segment, contributing $859.19 million, followed by Fintech at $160.27 million. The company also earns from Net2phone and National Retail Solutions (NRS), with revenues of $89.71 million and $135.51 million, respectively.
IDT Corporation, a small player in the telecom sector, has shown consistent earnings growth of 5.5% annually over the past five years, despite lagging behind the industry’s 25.7% growth last year. The company is debt-free and trades at a significant discount to its estimated fair value by 83.5%, highlighting potential undervaluation. Recent financial performance includes net income of US$22 million for Q1 2026 and basic earnings per share rising to US$0.89 from US$0.68 a year ago, driven by strategic share repurchases totaling $66 million since January 2016 and ongoing dividend payments enhancing shareholder returns. IDT’s growth potential is driven by NRS enhancements and net2phone’s AI deployment.
