7 Small-Cap Stocks to Buy in July 2022 Small-cap stocks, or public companies with market capitalizations (caps) ranging from $300 million to $2 billion, have suffered significantly since January. Analysts highlight smaller companies have the potential for substantial growth. But they tend to be highly sensitive to rising inflation and interest rate hikes due to weaker balance sheets and tighter profit margins. The Russell 2000 Index , a benchmark index for small-caps, has underperformed the broader market, having fallen 25% year-to-date (YTD). In comparison, the SP 500 and the Dow Jones Industrial Average indices have declined around 21% and 16%, respectively. According to Morningstar , small-cap stocks are trading at a 19% discount. Thus, they offer better opportunities against the mid-cap (trading at a 11% discount) and large-cap (trading at a 13% discount) stocks. Yet, this difference should not come as a surprise. Given the risk-reward profiles, small-cap companies typically underperform the broader market during downturns.