We Just Released: Our Top 3 Small-Cap Stocks to Consider Buying Before November (PREMIUM PICKS)

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Our monthly Best Buys Now are designed to highlight our team’s three favorite and most timely buys from our growing list of small-cap recommendations, to help Fools build their stock portfolios.

Why we like it: “Treat (LSE: TET) is a specialty chemicals company that focuses on supplying ingredients to customers primarily in the food and drink sector. Between 2012 and the end of 2023, CEO Daemmon Reeve and the board successfully repositioned the company from a low-margin bulk chemical supplier to the relatively higher-margin player it is today. They did this by moving up the value-added chain and working more closely with customers to provide specialized ingredients tailored to their products.

“Although Reeve has exited the business, Treatt’s performance in recent years has been impressive and new chief executive David Shannon inherits a company that operates from a position of strength. The company’s newly updated headquarters in the United Kingdom and expanded facilities in Florida provide expanded and updated laboratory, production and storage facilities, which management believes will provide a foundation for continued growth. With a large and growing end market to target and a compelling strategy to continue moving up the value-added chain, we believe Treatt’s long-term potential is exciting, even if the new boss will have to work to gain the trust of the market. just as long-time CEO Reeve did.”

Why we like it now: Treatt delivers strong financial performance, with 16% growth in second-half revenues, driven by organic business expansion, and a 7% increase in adjusted EBITDA, thanks to growth momentum in China. Furthermore, the company significantly reduced its net debt to £0.7 million, reflecting robust cash generation and cost discipline. It is now trading at 20.9 times earnings versus 36 times industry leaders. We are convinced that its recent record of increasing profits and managing expenses in the face of difficult market conditions makes this a price worth paying.