The panic selling that's gripped the market for the past week is a long-term investor's dream because stocks that were too rich to purchase before are now much more reasonably priced. 

Small-cap stocks under $2 billion in value are an especially attractive segment of those marked-down businesses because they tend to have the ability to respond more quickly to changes than their larger, more stodgy brethren.

Four small-cap stocks that look particularly compelling now include military drone-maker AeroVironment (NASDAQ:AVAV), gunsmith and outdoor gear company American Outdoor Brands (NASDAQ:AOBC), and fuel cell specialist Plug Power (NASDAQ:PLUG).

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A larger slice of an expanding pie

AeroVironment suffers from the fear that its monopoly on small, portable, unmanned aerial drones that soldiers carry in a backpack for surveillance or attacks may be ending. 

The Pentagon is seeking a second contract for lethal miniature aerial missile system, or LMAS, that would presumably supplant AeroVironment's Switchblade drone that currently dominates the field of battle. Analysts also are concerned that the defense contractor's primary Raven drones are also losing market share.

Yet this could also be a case of a rising tide lifting all boats. The defense budget under President Trump has grown significantly, even though this year's spending is flat at $705 billion. That's because spending priorities have changed, with cuts proposed in some areas and increases in others, including unmanned vessels.

Because AeroVironment's drone systems have proven themselves reliable under adverse conditions, it's not likely to lose much business, and it may very well see even more contract wins, even if it's not the only player in certain markets now. 

Shares of the drone maker are down 35% from last year, and they've lost nearly half their value from their 52-week high. With earnings expected to grow nearly 30% annually over the next five years, even better than their average annual rise of 24% over the past five years, AeroVironment could fly high from here.

Ready to shoot out the lights

The firearms industry has been depressed since President Trump won the election in 2016, but it's showing gathering strength as criminal background checks as adjusted by the National Shooting Sports Foundation have been growing, jumping 19% in January. Although not a precise measurement of gun sales, it gives an indication of consumer demand, and the industry has seen nine straight months of year-over-year growth.

American Outdoor Brands is actually a twofer pick because not only is it one of the biggest gunmakers in the country that should capitalize on growing demand, particularly as we head into a new presidential election campaign, but the Smith & Wesson owner is also expected to split itself in two, spinning off the outdoor gear business as a stand-alone company.

While smaller than the firearms segment, the $30 billion outdoor products and accessories industry is a significantly larger opportunity than the $4 billion firearms market.

Shares of American Outdoor are up 33% over the past six months (and up 84% from the low point hit last October), but it still trades at a discounted 10 times estimated earnings. Even analysts see profits expanding at a 15% rate each year for the next five years. 

Considering investors will be getting two stocks for the price of one, each with significant potential, this may be a unique company to buy.

Plugging into the future of energy

Admittedly, Plug Power is likely the riskiest of the three stocks here, if for no other reason than its history doesn't inspire much confidence. But that seems to be changing as more "anchor customers" sign onto the hydrogen fuel cell maker's list.

Earlier this year, Plug announced it signed a new $50 million contract with another large customer, which analysts speculated was Home Depot. It would join both Walmart and Amazon.com as anchors, and it says it's looking forward to adding four to five additional large customers as part of its plan to reach $1 billion in sales by 2024.

While that still seems like a tall order, and Plug Power will have to really accelerate the amount of business it generates to hit that goal, it continues to expand nonetheless.

Just two weeks ago, the hydrogen fuel cell leader announced it was partnering with Lightning Systems, which develops zero-emission drivetrains, to build zero-emission commercial trucks. The Class 6 trucks are those up to 12.5 tons and are used to support middle-mile delivery logistics between warehouses and distribution centers.

Although speculative, analysts are forecasting Plug Power will grow earnings by 25% annually for the next five years, so that even if it doesn't achieve that $1 billion milestone, it may still come very near the target.