Episode summary
2 Small Cap Stocks for Your Short List
Zacks Market Edge
· · 35 min · Hosts: Mark Zinski, Tracey Ryniec
Summary
The host and a guest argued that small caps still deserve attention even after lagging large caps again, especially when individual companies have balance-sheet support, specific catalysts, and valuations that look depressed. The guest said small caps are historically sensitive to interest rates, but he is more focused on bottom-up stock selection than on the asset class as a whole.
The first idea was Catalyst Bancorp, a Louisiana bank with a market cap around $68.3 million. The guest said the July acquisition of Lakeside should roughly double the asset base and eventually create synergies, while Louisiana’s data center buildout, natural gas activity, and business-friendly investment climate could provide a regional tailwind. He also pointed to the stock trading below tangible book value as a valuation support.
The second idea was NVE Corp, ticker NVEC, which makes spintronics-based sensors and related components. The guest said its high gross margins, expanding capacity, and exposure to automation, robotics, defense, medical devices, and possibly data centers make it an interesting long-term technology story. Even after a softer quarter, he said the company still produced strong cash flow and pays a $1 quarterly dividend that leaves the yield near 5% after the pullback.
Key takeaways
- The guest said small caps remain attractive on a stock-by-stock basis, even though the group is more sensitive to interest rates than large caps.
- Catalyst Bancorp’s July acquisition of Lakeside is expected to double its asset base and eventually drive earnings leverage.
- The guest said Catalyst Bancorp also benefits from Louisiana’s data center, natural gas, and infrastructure buildout, which could support local banking demand.
- NVE Corp’s appeal is its high-margin spintronics technology, with applications in automation, robotics, medical devices, defense, and potentially data centers.
- The guest said NVE Corp’s quarter was soft on revenue, but margins, cash flow, and a long-running $1 quarterly dividend make the pullback look attractive.
- The host and guest stressed that small-cap investors need to keep reading filings, earnings reports, and conference-call commentary because information is harder to find than for large caps.
Notable quotes
“small caps have historically been correlated with interest rates”
“you're investing in a tech company, which is arguably cutting edge. Granted, yes, it's speculative or speculative and is associated with a semiconductor industry”
How the episode opens
Stocks, bonds, ETFs. Straight out of downtown Chicago, this is Zacks Market Edge. — Welcome to Zacks Market Edge, the podcast about investing in your life. I'm your host, Tracy Ryniec, and this week I'm joined by Zacks very own small cap analyst, Mark Sinsky. He's back with us to bring two small cap stocks that maybe we should have on our short list here in October of 2026. Welcome back, Mark.
Uh, thanks for having me, Tracy. Good to be back.
Yeah, um, it's been a while. So, we haven't really been looking at the small caps that much on the podcast, even though they had a good start to the beginning part of this year, and they were outperforming the large cap stocks for the first time in years, and then they've kind of let us down recently, and we're we're back to underperformance compared to the large caps, but I'm still a big fan of the small caps, and I think investors would be wise to be poking around in any of the small caps that, uh, you know, have had maybe some big pullbacks here, um, because it's not always going to be the large caps as we move forward here. And I've I've always preached people should be diverse in their portfolios.
So, and by diverse, not just in industries, but also in market cap. So, what is going on with the small caps here in the fall of 2026? Is this just a return to the Mag 7s, and, you know, we can find some deals, or what is going on?
Well, as an asset class, um, small caps have historically been correlated with interest rates. Um I put out an article on this a while back with some some graphs looking at uh uh the Russell 2000 and um the Fed funds rate.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- small cap stocks
- 2026 outlook
- microcaps
- stock upgrades
- short list watchlist
Companies and tickers mentioned
- NVEC
- NVE Corp
Watch the episode
Watch “2 Small Cap Stocks for Your Short List” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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