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3 Top Small-Cap Stocks to Buy Right Now

By Keith Speights – Nov 8, 2021 at 5:55AM

Key Points

  • Easterly Government Properties is a relatively low-risk small-cap stock that offers a great dividend.
  • DermTech targets a massive market opportunity with its genomic tests for skin cancer.
  • Jushi stands out as an up-and-coming cannabis operator that analysts really like.

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Their market caps are small, but their opportunities are big.

Think small. That's the best investing strategy to make explosive gains. Huge companies usually don't have the tremendous growth prospects that small companies do. 

Of course, investing in small-cap stocks typically comes with a higher level of risk. But you can reduce that risk to some extent by picking companies with especially promising opportunities. Here are three top small-cap stocks to buy right now.

Two people looking at a laptop.

Image source: Getty Images.

1. Easterly Government Properties

Easterly Government Properties (DEA -0.19%) isn't too far away from being disqualified as a small-cap stock, with its market cap of $1.8 billion. However, if you're looking for a low-risk investment, Easterly definitely fits the bill.

The company is a real estate investment trust (REIT) that focuses on, as its name indicates, government properties. Easterly owned 83 properties as of Sept. 30, 2021. All but one of them were leased to U.S. federal agencies. 

It's unusual for a dividend to be the main attraction for a small-cap stock. But that's the case with Easterly. Its dividend currently yields nearly 5%.

This REIT also has a solid growth opportunity, though. So far this year, it has acquired 10 new properties either directly or through a joint venture. CEO Bill Trimble said in the company's third-quarter conference call that Easterly has a "robust pipeline of actionable opportunities" that will drive growth into 2023.

2. DermTech

DermTech (DMTK) probably is more aligned with what many investors searching for great small-cap ideas want. Its market cap stands at a little over $800 million. And DermTech is targeting a massive market.

The company develops genomic tests for diagnosing skin cancer. It already has a melanoma test on the market. DermTech hopes to soon launch another test for evaluating ultraviolet ray damage and skin cancer risk. 

How big is the opportunity for DermTech? Consider that more people are diagnosed with skin cancer than all other types of cancer combined. More than 50 million people have UV-related skin damage that significantly increases their risk of developing skin cancer. 

DermTech estimates that the addressable market for its current genomics tests and those in development totals around $10 billion per year. With the advantages that its noninvasive tests offer compared to the current approach of surgical biopsy, the company should be able to capture a nice chunk of that market over time.

3. Jushi Holdings

Jushi Holdings (JUSHF -2.90%) is the smallest of these three small-cap stocks, with a market cap of less than $640 million. However, it definitely has a big opportunity.

The company is an up-and-coming multistate cannabis operator. Jushi currently operates in eight states, with retail cannabis or CBD dispensaries open in all but one of those markets. It also holds licenses for additional dispensaries in four of the states.

Jushi continues to grow significantly both organically and through acquisitions. In the second quarter of 2021, the cannabis operator's sales more than tripled year over year with strong earnings growth. 

Analysts think the stock could double over the next 12 months. Over the longer term, Jushi's prospects could be even better as Virginia's recreational cannabis market opens in 2024. 

Keith Speights owns shares of DermTech, Inc. The Motley Fool owns shares of and recommends DermTech, Inc. and Jushi Holdings. The Motley Fool recommends Easterly Government Properties. The Motley Fool has a disclosure policy.

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