Small-cap companies are expected to outperform the broader market because they are more sensitive to macroeconomic movements than other companies. Government support checks, robust COVID-19 vaccine distribution and rising inflation are among the key factors that could drive the growth of small-cap stocks. We think Blueknight Energy Partners (BKEP), Ocean Bio-Chem (OBCI), and Live Ventures (LIVE) exhibit impressive earnings growth potential and could be solid bets now.

The U.S. is at the beginning of a strong macroeconomic recovery, which should shortly be reflected in corporate revenues and earnings. Businesses are increasingly reverting back to contact-intensive activities, made possible by substantial progress on the COVID-19 vaccination front. On March 10, House Democrats passed a $1.9 trillion pandemic rescue package  that is  expected to give a huge boost to consumer spending. Furthermore, rising bond yields have raised investors’ confidence of a strong U.S. economic comeback.

Economic recoveries usually benefits small-cap stocks because they are more sensitive to consumer spending. A reflection of the gradual economic recovery’s effect on small-cap stocks is evident in  iShares Russell 2000 ETF’s (IWM) 46.9% gain over the past six months.

Also, small-cap stocks generally perform well with rising inflation due to a rise in aggregate demand it implies.  the annual inflation rate in the U.S.  increased to 1.7% in February, up  from 1.4% in January. This represents its highest rate since February of 2020.

Against this backdrop, we think it would be wise to bet on small-cap companies  Blueknight Energy Partners, L.P. (BKEP), Ocean Bio-Chem, Inc. (OBCI), and Live Ventures Incorporated (LIVE), which  possess solid growth attributes.

Blueknight Energy Partners, L.P. (BKEP)

With a market capitalization of $130.63 million, BKEP is a master limited partnership (MLP) company that owns an independent asphalt terminalling network in the U.S. The company provides integrated terminalling solutions for infrastructure and transportation end markets.