These 3 Small Caps Are Dirt Cheap and Ignored
High-growth potential, low attention — discover hidden stocks with room to run.
1. Five Point Holdings - FPH
The company
Five Point Holdings designs, owns, and develops mixed-use planned communities in Orange County, Los Angeles County, and San Francisco County. The company operates through three segments: Valencia, San Francisco, and Great Park. It sells residential and commercial land sites to homebuilders, commercial developers, and commercial buyers by providing development management services; operates and owns a commercial office, research and development, medical campus, and other properties; and provides development and property management services.
The investment rationale
Five Point Holdings presents a compelling investment opportunity driven by strong fundamentals and strategic positioning in California’s supply-constrained real estate markets. The company’s 2024 revenue growth (12.4% year-over-year) reflects a successful pivot to higher-margin management services, even as land sales dipped slightly. Improved cost controls boosted gross margins, while equity earnings from ventures like the Great Park surged, lifting net income to $68.3 million. With a robust cash position ($528.3 million in Q1 2025), reduced debt, and a credit rating upgrade, FPH is financially resilient. Valuation metrics (P/E of 4.2, price-to-book of 0.48) suggest the stock is undervalued, trading below a fair value estimate of $9.60 per share. Technical indicators like bullish moving averages and a neutral RSI signal room for upside, though macroeconomic risks (interest rates, regulatory delays) warrant caution.
The company’s focus on capital efficiency, recurring income streams, and strategic partnerships in high-demand markets positions it for long-term growth. While capital expenditures remain high, FPH’s disciplined spending and liquidity buffer mitigate near-term risks. Given its undervaluation, strong execution, and favorable market dynamics, the stock offers clear upside potential. BUY FPH for exposure to a well-managed player in a tight housing market, balancing growth prospects with prudent risk management.
2. Radware - RDWR
The company
Radware develops, manufactures, and markets cyber security and application delivery solutions for cloud, on-premises, and software defined data centers worldwide. The company operates in two segments, Radware's Core Business and The Hawks' Business. It offers cloud application protection service, cloud WAF, bot manager, API protection, web DDoS protection, client-side protection, threat intelligence, Kubernetes WAAP, and alteon integrated WAF; cloud DDoS protection service, defencepro X, cyber controller, firewall as-a-service; alteon, linkproof NG, SSL inspection etc.
The investment rationale
Radware has demonstrated strong momentum with accelerating revenue growth, particularly in its cloud business (cloud ARR up 19% year-over-year), signaling a successful shift toward recurring revenue streams that now make up 80% of total sales. The company’s profitability is improving sharply, with non-GAAP EPS doubling to $0.87 in 2024 and operating cash flow surging to $71.6 million—a testament to efficient cost management and disciplined execution. A rock-solid balance sheet ($420 million in cash, no significant debt) and stable gross margins (82.2%) provide a sturdy foundation, while strategic investments in AI-driven security and partnerships with giants like Cisco position it to capitalize on growing cybersecurity demand.
While competition from larger players and geopolitical risks in Israel are valid concerns, Radware’s focus on high-growth areas like cloud security and its reasonable forward valuation (forward P/E of 24.9) mitigate these risks. The stock’s technical indicators support a bullish trend, and despite a high trailing P/E, the company’s improving fundamentals and industry tailwinds justify optimism. For investors, the combination of recurring revenue growth, strong cash generation, and strategic positioning in a critical sector makes Radware a compelling BUY for both short-term momentum and long-term growth. The positives—accelerating cloud adoption, operational efficiency, and a war chest of cash—far outweigh near-term volatility or tax-related headwinds, offering a clear path for sustained value creation.
3. Unity Bancorp - UNTY
The company
Unity Bancorp operates as the bank holding company for Unity Bank that provides commercial and retail banking services. It offers personal and business checking, money market, savings, and retirement accounts, as well as time and noninterest and interest-bearing demand deposits. The company also provides commercial, small business administration, consumer, mortgage, and home equity and personal loans; and owner and non-owner-occupied commercial mortgages.
The investment rationale
Unity Bancorp presents a convincing investment case backed by consistent growth and prudent management. The company has demonstrated strong financial performance, with revenue up 14.8% year-over-year in Q1 2025 and net income rising to $11.6 million ($1.13 per diluted share). Key drivers include robust loan growth (3.74% quarterly increase) and deposit expansion (4.82% excluding brokered deposits), alongside improved profitability metrics like a 41% profit margin and a net interest margin of 4.16%. These trends highlight Unity’s ability to navigate rising funding costs while maintaining disciplined credit-risk practices, reflected in declining nonaccrual loans (0.58% of total loans) and a solid capital position (common equity Tier 1 ratio of 13.9%). Despite a challenging environment, Unity’s focus on commercial lending and technology investments positions it well for sustained growth, though risks like exposure to real estate (96% of loans) and interest rate sensitivity warrant monitoring.
The stock’s technical setup suggests consolidation after a 50% rally, trading slightly below short-term averages but above long-term support. Valuation remains attractive with a trailing P/E of 9.7 and a price-to-book ratio of 1.36, both below regional bank peers. Analysts see upside potential to ~$51 per share (10.5x forward earnings), offering a margin of safety. While rising deposit costs could pressure margins, Unity’s track record of expense control and deposit-gathering strength mitigates this risk. For investors seeking a stable, undervalued regional bank with growth potential, Unity Bancorp is a BUY. The combination of strong fundamentals, conservative management, and an attractive valuation supports both near-term appreciation and long-term value creation, making it a resilient pick in a volatile market.
