Editor’s Note
As small-cap stocks gain traction amid steady rates and tech momentum, this article explores how to identify companies with the fundamentals to thrive in shifting markets.
As the U.S. markets navigate a landscape marked by steady interest rates and tech-driven momentum, small-cap stocks are drawing attention amid broader economic shifts. In this context, identifying promising small-cap companies involves looking for those with strong fundamentals and growth potential that can thrive in a dynamic market environment.
Frequency Electronics, Inc. specializes in the design, development, manufacture, marketing, and sale of precision time and frequency control products for microwave integrated circuit applications with a market cap of $547.65 million.
Operations: FEI generates revenue primarily from its FEI-NY and FEI-Zyfer segments, contributing $51.92 million and $20.61 million, respectively.
The company, which is debt-free, saw earnings soar by 168% over the past year, outpacing the industry’s 14%. Its price-to-earnings ratio of 25.4x remains attractive compared to peers at 27.2x. Recent contracts valued at US$15 million for aerospace and satellite systems underscore its technological prowess and reliability in high-stakes environments. Despite a volatile share price recently, Frequency’s focus on precision oscillators for defense applications highlights potential future growth avenues while maintaining robust financial health without debt concerns.
Agora, Inc. operates a real-time engagement platform-as-a-service across the United States, China, and other international markets with a market cap of $406.91 million.
Operations: Agora generates revenue primarily from its Internet Telephone segment, which contributed $137.36 million. The company’s financial performance is influenced by its gross profit margin, which reflects the efficiency of its revenue model.
The company has repurchased 1.3 million shares for US$4.8 million recently, reflecting confidence in its growth trajectory and financial health, with its debt-to-equity ratio rising to 13% over five years yet maintaining more cash than total debt. Agora’s collaboration with Agnes AI signifies strategic expansion into AI-enhanced productivity tools, potentially driving future revenue growth projected between US$37-38 million for Q4 2025, marking up to a 10% increase year-over-year.
Gibraltar Industries, Inc. is a company that manufactures and provides products and services across the residential, renewable energy, agtech, and infrastructure sectors both in the United States and internationally, with a market cap of $1.50 billion.
Operations: Gibraltar Industries generates revenue primarily from its residential segment, contributing $811.27 million, followed by the agtech and infrastructure segments at $199.45 million and $87.69 million, respectively. The company reports a segment adjustment of $285.41 million in its financials.
Its debt-free status and high-quality earnings position it well in the market. Recent guidance revisions show expected net sales between US$1.13 billion to US$1.14 billion for 2025, down from prior forecasts of up to US$1.18 billion, with GAAP EPS adjusted to US$3.21-US$3.26 from earlier projections of up to US$3.77 per share due to operational challenges including divestment impacts and market volatility risks that could affect future growth prospects despite a solid project pipeline.
Gibraltar Industries is enhancing operational efficiencies and targeting M&A to improve profit margins.
