Small-cap stocks have been among the worst performers in the past few years. They’ve only delivered above-average gains during the 2021 boom, but the current market environment is far from friendly to these stocks. It’s not a good idea to expect these stocks to beat the market collectively like they did back then.
But it’s also a bad idea to miss out on some under-the-radar penny stocks that are trading below their intrinsic prices after the latest selloff. The Russell 2000 Index is still down almost 14% from its late 2024 peak. That index started outperforming the market in Q4 2024, but the music soon stopped due to tariffs and AI fears.
Now, it’s a good idea to go for bargain hunting, as many penny stocks trade at bargain levels. The following three have little downside risk and solid upside potential.
This post originally appeared at Money Morning.