Here's top 5 small cap stocks in my watchlist

Small cap stocks outperformed the S&P 500 by more than 4% annually over the past century.

Here's top 5 small cap stocks in my watchlist: 🧵

1. $Hims & Hers Health Inc.(HIMS)$

Leader in telemedicine with 49% market share that goes up to 54% among newcomers.

It's been compounding the revenue at 76% annually for the last 5 years. It still has +$120 billion untapped market opportunity in menopause, sleep, diabetes and cholesterol.

- 5 year revenue CAGR: 76%

- Forward P/E: 65

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2.

$TransMedics Group, Inc.(TMDX)$

Manufacturer of the only FDA approved warm perfusion machines in the market.

It's on track to reach 10,000 annual transplants by 2028. It declined more than 20% following the short report by Scorpion Capital but nothing substantial has come out of it.

- 5 year revenue CAGR: 76%

- Forward P/E: 65

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3.

$Root, Inc.(ROOT)$

Usage-based auto insurer using mobile telematics to price premiums.

It's growing direct written premium per user at 48% annually since 2023. Addressing a $260B auto insurance market with less than 0.5% market share despite superior unit economics for good drivers.

- 5 year revenue CAGR: 30%

- Forward P/E: 7

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4.

$Shift4 Payments, Inc.(FOUR)$ End-to-end payment processor specializing in hospitality and entertainment, powering transactions for 40% of America's leading hotels and 25% of Forbes' most valuable sports teams.

Converting legacy clients from gateway-only to full payment processing drives 4-6x revenue expansion per merchant, with only 35% of base currently converted.

- 5 year revenue CAGR: 34%

- Forward P/E: 26

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5.

$Dave Inc(DAVE)$ Digital banking app targeting underserved Americans, pioneering small-dollar advances up to $500 without overdraft fees.

Side-steps subprime lending risks by focusing on employed customers (average 40 paycheck deposits) and using alternative data for underwriting.

Currently at ~10M members with minimal marketing spend.

- 5 year revenue CAGR: 35%

- Forward P/E: 34

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