The American stock market -- alongside many of its international peers -- has been on fire in recent years, with the S&P 500 delivering total returns of nearly 22% in 2017. Of course, there were some signs that the market was a little overheated and overdue for at least a brief cooldown. That's exactly what investors are witnessing in February.

The sharp volatility in early 2018 is a stunning departure from last year, which was unusual for its lack of major movements -- up or down. But for long-term investors, there's not a whole lot to worry about. The recent pullback could even be a great time to dust off your watchlist in search of buying opportunities. I think genetic testing leader Invitae (NYSE:NVTA), enzyme designer Codexis (NASDAQ:CDXS), and urban cement powerhouse U.S. Concrete (NASDAQ:USCR) are among the top small-cap stocks to buy this month.

A tube containing a swab for a genetic test, lying atop a graph of test results.

Image source: Getty Images.

Growth compensating for dilution

Invitae has taken the genetic testing market, which helps clinicians and patients identify health risks or pinpoint disease diagnoses, by storm. Rather than selling ultra-expensive tests in low volumes, the company's business model relies on selling affordable tests in large volumes. Essentially, the goal is to greatly expand the market by making genetic testing accessible to just about any individual -- and it's worked so far, with some caveats.

In early January, the company provided investors with preliminary full-year 2017 results and preliminary full-year 2018 guidance. The stock promptly sank nearly 14%. Why? Wall Street was expecting more optimistic guidance for the year ahead. Analysts actually had good reason to be upset. But the stock was punished once again when earnings were finalized, despite the numbers actually being slightly better than the preliminary announcement. 

The company achieved year-over-year revenue growth of 172%, but Invitae has been growing so quickly that that's considered a disappointment. The real dismay was prompted by preliminary guidance for the current year. While management forecasts at least $120 million in total revenue, or growth of 79% from 2017, Wall Street was expecting considerably higher sales in 2018 given two recent acquisitions.

However, individual investors don't have to follow Wall Street's lead and pretend that they aren't impressed with the incredible growth being delivered. Even better for long-term investors: With an astounding 30% drop thus far in 2018, Invitae could be a buy right now.

Still, it's not all lollipops and rainbows for the loss-accruing, high-growth company. For instance, there's a very long way to go before the business is profitable. Additionally, management relied on heavy dilution to fuel growth in recent years, which really sapped returns. But even after accounting for that, the company's market cap is now under $340 million for the first time since late 2016 -- a year in which the business coughed up $25 million in revenue. Compare that to at least $120 million expected in the year ahead on considerable growth in testing volume sales, product offerings, and collaborations with biopharma companies and, well, the stock is a comparative bargain given its high-growth credentials. 

If you're looking for a hyper-growth stock gobbling up market share in a futuristic industry, then look no further than Invitae. Just be ready for higher-than-average volatility.

Metal catwalks overlooking vats at a small bio-manufacturing facility.

Image source: Getty Images.

What's in store for 2018?

The stock of enzyme designer and manufacturer Codexis absolutely crushed it in 2017 with a gain of 82%. While the company usually doesn't release its full-year earnings until early March, investors can be relatively confident that they'll be solid.

Through the first nine months of 2017, product revenue soared 73% from the year-ago period, as new enzymes gained traction thanks to the early sales success of new pharmaceutical drugs. Product gross margin settled at 44% compared to 33% in the prior-year period. What's more remarkable is that it achieved this growth despite falling revenue from historical products and without much contribution from lucrative opportunities emerging in food ingredients.

By all accounts, the company's technology platform is finally gaining market traction. That has provided Codexis with numerous shots on goal to expand from its historical niche in pharmaceutical manufacturing to food ingredients, diagnostics, and industrial processes. In 2018, the enzyme designer expects to double its number of major partnership deals -- the kind accompanied by eight-figure up-front payments -- from two to four and generate $25 million in revenue in the process. 

Plus, the company is starting clinical trials of its own biotherapeutic drug candidate, aimed at treating the metabolic disorder phenylketonuria (PKU), sometime this year. The enzyme will be engineered to withstand the journey through the stomach and gastrointestinal tract, so that it can be administered orally, rather than the intravenous route most enzymes require. If product sales continue to grow in lockstep with the numerous catalysts on tap, then 2018 could be another great year for the small-cap stock. Investors willing to bet on optimistic full-year guidance from management in March should feel pretty comfortable buying the stock now.

A crane reaching the top of a tall building.

Image source: Getty Images.

Can't stop, won't stop

U.S. Concrete boasts one of the most profitable cement operations in the country. It earned its leadership position by furiously acquiring smaller competitors in the major metropolitan areas in which it operates, allowing it to focus on large, commercial jobs such as major corporate campuses, airport renovations, and some of the tallest skyscrapers in the world. There are no signs that management is stopping anytime soon. In fact, the last three of the last four press releases, dating back to November 2017, detail acquisitions, including two made since late December. 

As with any business in a highly cyclical industry (such as building materials), slowdowns are inevitable. The next industry or economic downcycle will be the first for U.S. Concrete shareholders, as it emerged from bankruptcy after the Great Recession. The good news is that that doesn't appear likely in the near future. The better news is that most major urban construction projects are bid on years in advance, so it stands to reason that investors would have a fair amount of warning.

While the stock would obviously be affected by a downturn, the company may fare considerably better than its peers. By the end of 2016, U.S. Concrete was realizing selling prices of $130.35 per cubic yard, compared to an industry average of just $107 per cubic yard. 

There are also ample opportunities for expansion in its major markets. Management estimates that the ready-mix concrete market, the most driver of growth, in the United States generates total annual revenue of $30 billion for 2,200 different producers. Considering that U.S. Concrete will report less than $1.4 billion in total revenue for 2017, the company's acquisition binge is far from reaching a saturation point. Given the 10% drop thus far in 2018, long-term investors could find good reasons to buy the stock this month.

Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.