Stocks with small market capitalizations are generally less correlated to the performance of larger companies and can provide an additional layer of diversification for investors. Considering the recent implosion in some of the mega-cap tech names, it’s easy to see why small-caps are outperforming the broader market this year.
Even if you missed out on early 2023’s run-up in small-cap stocks, you’ve far from missed the boat when it comes to undervalued, under-the-radar opportunities in this space. Today we’re focusing on a promising small-cap with plenty of upside potential.
ARC Document Solutions (ARC)
This digital printing and document-related services company operates worldwide, focusing on the engineering and construction space. Despite economic downturn worries, ARC’s earnings could keep growing thanks to its low valuation and steady operating results. Sell-side estimates call for earnings to increase from 26 cents per share in 2022 to 34 cents per share in 2024. ARC is one of the best-overlooked dividend stocks, with a high forward yield of 6.37%. Earnings growth could also result in moderate increases in this payout over time.
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