Small-cap stocks can be incredibly lucrative investments because their lack of analyst coverage leads to frequent mispricings.
However, these businesses (and their stock prices) often stay small because their subscale operations make it harder to expand their competitive moats.
A number of stocks fell in the morning session after markets pulled back as a hotter-than-expected wholesale inflation report for July dampened hopes for a Federal Reserve interest rate cut. The U.S. Producer Price Index (PPI), a key measure of wholesale inflation, rose 0.9% month-over-month in July, far exceeding the 0.2% increase that economists had predicted. Annually, prices at the wholesale level jumped 3.3%, also surpassing the 2.5% forecast. This hotter-than-expected data has poured cold water on widespread expectations for an interest rate cut from the Federal Reserve next month. Persistent inflation makes it less likely for the central bank to ease monetary policy. Sectors with high-growth stocks, such as SaaS, are particularly sensitive to interest rate changes, as the prospect of higher rates for longer can diminish the present value of their future earnings, leading to a decline in stock prices.
Companies with more cash than debt can be financially resilient, but that doesn’t mean they’re all strong investments.
Some lack leverage because they struggle to grow or generate consistent profits, making them unattractive borrowers.
A number of stocks jumped in the afternoon session after the SaaS sector continued to rally as favorable inflation data bolstered hopes for a Federal Reserve interest rate cut. This optimism was largely driven by a benign July Consumer Price Index (CPI) report, which solidified investor expectations for a Federal Reserve interest rate cut. Following the release of the inflation data, which showed a year-over-year increase of 2.7%, the probability of a rate cut in September surged to over 96%. Lower interest rates are typically beneficial for growth-oriented technology stocks, as they can reduce borrowing costs and increase the present value of future earnings. Adding to the positive sentiment was a 90-day delay in the imposition of higher tariffs on Chinese goods, which reduced trade-related uncertainty for the technology sector.
A number of stocks jumped in the morning session after the Software as a Service (SaaS) sector rebounded following the sell-off in the previous trading session as a weaker-than-expected U.S. jobs report increased the probability of a Federal Reserve interest rate cut. The July Nonfarm Payrolls (NFP) report showed the U.S. economy added only 73,000 jobs, significantly below the 110,000 forecast. This, combined with downward revisions for May and June, signaled a cooling labor market to investors. In response, market expectations for a September interest rate cut by the Federal Reserve surged from roughly 40% to over 80%. A potential rate cut is generally favorable for growth sectors like technology and SaaS, as lower rates can increase the present value of their future earnings, boosting stock valuations.
A highly volatile stock can deliver big gains - or just as easily wipe out a portfolio if things go south.
While some investors embrace risk, mistakes can be costly for those who aren’t prepared.
A company that generates cash isn’t automatically a winner.
Some businesses stockpile cash but fail to reinvest wisely, limiting their ability to expand.
Shares of payments and billing software maker Bill.com (NYSE:BILL)
fell 3.7% in the afternoon session after an analyst at investment firm Baird lowered the price target on the company's shares. Baird analyst David Koning maintained a 'Neutral' rating on the stock but trimmed the 12-month price target to $52 from a previous $55. A price target represents an analyst's projection of a stock's value in the future. While the 'Neutral' rating suggested the firm did not see a strong reason to either buy or sell the shares, the reduction in the price target indicated a slightly more cautious view on the stock's potential for appreciation over the next year.
Wall Street has set ambitious price targets for the stocks in this article.
While this suggests attractive upside potential, it’s important to remain skeptical because analysts face institutional pressures that can sometimes lead to overly optimistic forecasts.
Shares of payments and billing software maker Bill.com (NYSE:BILL)
jumped 4.2% in the afternoon session after the recently passed "One Big, Beautiful Bill" is seen as a positive for the company's core small and medium-sized business (SMB) customers. The sweeping tax reform package includes several provisions aimed at supporting smaller companies, such as making the small business deduction permanent and renewing incentives for research and development. Bill.com provides a financial operations platform primarily for SMBs, helping them manage payments, billing, and expenses. The positive macro-economic tailwind from the new legislation could lead to a healthier environment for these businesses. An improved financial outlook for SMBs may translate into increased spending on technology and software, potentially boosting demand for Bill.com's platform as companies invest in tools to automate and scale their operations.
A number of stocks fell in the afternoon session after the Trump administration announced intentions to impose a 35% tariff on many goods imported from Canada.
The $10-50 price range often includes mid-sized businesses with proven track records and plenty of growth runway ahead.
They also usually carry less risk than penny stocks, though they’re not immune to volatility as many lack the scale advantages of their larger peers.
A number of stocks fell in the afternoon session after the major indices pulled back (Nasdaq -1.3%, S&P 500 -1.1%) as Israel carried out significant strikes on Iranian nuclear and military sites, dramatically escalating fears of a broader conflict in the Middle East. This development has sent crude oil prices surging, as investors fear potential disruptions to global oil supply and a wider regional conflict.
Wall Street is overwhelmingly bullish on the stocks in this article, with price targets suggesting significant upside potential.
However, it’s worth remembering that analysts rarely issue sell ratings, partly because their firms often seek other business from the same companies they cover.
Payments and billing software maker Bill.com (NYSE:BILL) reported Q1 CY2025 results beating Wall Street’s revenue expectations, with sales up 10.9% year on year to $358.2 million. On the other hand, next quarter’s revenue guidance of $375.5 million was less impressive, coming in 1.8% below analysts’ estimates. Its non-GAAP profit of $0.50 per share was 33.7% above analysts’ consensus estimates.
The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how finance and hr software stocks fared in Q1, starting with Bill.com (NYSE:BILL).
Bill.com has gotten torched over the last six months - since November 2024, its stock price has dropped 52.2% to $44.40 per share. This might have investors contemplating their next move.
Summary: JP Morgan analyst Tien-tsin Huang hosted 17 payments and processing firms at a conference. He had an Overweight rating for BILL Holdings and Fiserv, and upgraded Marqeta's rating. He projected strong growth potential for BILL and Fiserv, and praised Marqeta's modern platform.
