Many small-cap stocks have limited Wall Street coverage, giving savvy investors the chance to act before everyone else catches on.
But the flip side is that these businesses have increased downside risk because they lack the scale and staying power of their larger competitors.
A number of stocks jumped in the afternoon session after markets continued to rally as investor optimism grew for a potential Federal Reserve interest rate cut in September. This optimism was largely fueled by a recent consumer price index report that showed inflation easing, along with public comments from Treasury Secretary Scott Bessent advocating for a significant 50-basis-point rate cut. The prospect of lower borrowing costs tends to boost rate-sensitive sectors like Business Services, as it can encourage companies to increase spending on consulting, IT projects, and staffing.
Machine vision technology company Cognex (NASDAQ:CGNX) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, with sales up 4.1% year on year to $249.1 million. Guidance for next quarter’s revenue was optimistic at $255 million at the midpoint, 2.1% above analysts’ estimates. Its non-GAAP profit of $0.25 per share was 5.8% above analysts’ consensus estimates.
A number of stocks jumped in the afternoon session after a key inflation report met expectations, bolstering hopes for a Federal Reserve interest rate cut, while a separate report indicated rising optimism among small businesses. The July Consumer Price Index (CPI) report showed annual inflation holding steady at 2.7%, aligning with forecasts and increasing the probability of a Federal Reserve interest rate cut to over 94%. Lower interest rates can stimulate the economy by making it cheaper for businesses to borrow and invest.
The issues that led to all three stocks underperforming the market in the first half of 2025 appear temporary, and their long-term growth prospects look superb.
Shares of machine vision technology company Cognex (NASDAQ:CGNX) jumped 21.5% in the afternoon session after the company reported second-quarter financial results that beat Wall Street estimates and provided strong guidance for the upcoming quarter. The industrial machine vision specialist posted second-quarter adjusted earnings of $0.25 per share on revenue of $249 million, surpassing analyst expectations. The revenue figure marked a 4% increase from the year-ago period, propelled by growth in its logistics business and stronger trends in factory automation. Adding to the positive sentiment, Cognex provided an upbeat forecast for the third quarter, with expected revenue between $245 million and $265 million, which came in ahead of Wall Street's consensus estimate.
Machine vision technology company Cognex (NASDAQ:CGNX) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, with sales up 4.1% year on year to $249.1 million. Guidance for next quarter’s revenue was optimistic at $255 million at the midpoint, 2.1% above analysts’ estimates. Its non-GAAP profit of $0.25 per share was 5.8% above analysts’ consensus estimates.
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.
Volatility cuts both ways - while it creates opportunities, it also increases risk, making sharp declines just as likely as big gains.
This unpredictability can shake out even the most experienced investors.
