Please ensure Javascript is enabled for purposes of website accessibility

3 Top Small-Cap Stocks to Buy in July

By Rick Munarriz - Jul 4, 2020 at 2:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Big things can come from small cap stocks. Check out these three promising stocks with market caps of $2 billion or less.

Investors hoping to get more bang for the buck often find themselves exploring small-cap stocks. Companies with market caps below $2 billion have a lot of upside if things go right, but the risks are also substantially higher with price tags this low.

Groupon (GRPN -1.01%), Tanger Factory Outlet Centers (SKT 3.60%), and Glu Mobile (GLUU) are three small-cap stocks to consider adding to your portfolio this month. Let's dive into why they are stocks to buy in July.

A woman celebrating as a stock chart on the wall behind her moves higher.

Image source: Getty Images.


It seems a lifetime ago when Groupon was cool and booming. Offering discounted prepaid vouchers to local restaurants, shops, services, and other experiences was all the rave. Lead-hungry proprietors warmed up to Groupon even if meant selling a dollar for 50 cents and settling for a quarter. 

Time hasn't been kind to Groupon, and last month it succumbed to a 1-for-20 reverse stock split last week just to remain in exchange compliance. Groupon's business was already slumping before the pandemic. Revenue had declined in each of the three previous years, so it's not as if the 35% plunge it posted in the first quarter of this year was a jarring event. Businesses were closing down in the final few weeks of the period, and the last thing on their mind was finding new leads. 

Needs will change at the other end of this pandemic. Groupon will be with fewer employees and even a different CEO at the other end of the COVID-19 crisis, but the recession should find folks scurrying back to Groupon for local deals -- and merchants will be even hungrier than before to offer them. 

Tanger Factory Outlet Centers

Another out-of-favor stock that should be an early leader in the eventual pandemic recovery process is Tanger. The factory outlet center operator attracts more than 181 million annual visitors to its three dozen-plus locations, but that won't be the case this year, as its upscale outlets closed down in mid-March.

Life is starting to return to some degree of normality. Most of its outlet centers are open, and the good news is that traffic is at 90% of where it was a year earlier for stores that have been open for at least a month. Consumers still crave the creature comfort of in-person shopping at brand-name outlet stores. Tanger is also understandably a more attractive destination for shoppers in a recession. 

Tanger suspended its hefty distributions when its near-term outlook was bleak. The quarterly payouts should return shortly now that Tanger is back in business, and probably already profitable again.  

Glu Mobile

Let's close with a stock I identified two months ago as a top small-cap stock to buy in May. It was a smart call, with the mobile gaming publisher rising 28% that month.

Things are going well for the company behind free-to-play games that include Design HomeCovet Fashion, and Tap Sports Baseball. It posted blowout financial results in May, lifting its bookings guidance for the second quarter that just ended as well as all of 2020. 

Sticky casual games have proven their worth during the shelter-in-place phase of the COVID-19 situation, as folks are hungry for entertainment while they spend more time at home. Groupon, Tanger Factory Outlet Centers, and Glu Mobile are top small-cap stocks to buy this month. 

Rick Munarriz owns shares of Tanger Factory Outlet Centers. The Motley Fool recommends Tanger Factory Outlet Centers. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Glu Mobile Stock Quote
Glu Mobile
Groupon, Inc. Stock Quote
Groupon, Inc.
$12.71 (-1.01%) $0.13
Tanger Factory Outlet Centers, Inc. Stock Quote
Tanger Factory Outlet Centers, Inc.
$17.82 (3.60%) $0.62

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/14/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.