Main in small-caps: rare-earth metals, iPhone chips, US-Iran talks

Shares of rare earth metals producer USA Rare Earth rose after the purchase of Serra Verde mines - the company strengthened its position in the strategic sector. Shares of cannabis and psychedelics producers rose on the news about the easing of regulation. Against this background, analysts pay attention to small-caps stocks in anticipation of the outcome of negotiations between the US and Iran, as well as chipmakers that may benefit from the launch of a foldable iPhone. The main events in the small-caps sector from April 20 to 24 are in our review.

The situation in the Middle East remains uncertain, and further market dynamics largely depends on the outcome of negotiations between the U.S. and Iran. Analyst Aldiyar Anuarbekov highlighted two scenarios - truce or escalation - and four stocks that could benefit from them.

In the event of a truce, beneficiaries could include companies sensitive to lower fuel prices: notably Frontier Group Holdings, an ultra-low-cost carrier with a fleet of 176 Airbus planes, and cargo carrier Covenant Logistics, which could quickly restore margins.

If the conflict drags on, defensive assets are of interest. In particular, aluminum, whose production has suffered in the Middle East during the attacks. Among the interesting companies: Kaiser Aluminum, benefiting from disruptions in aluminum supplies, and Hecla Mining, a silver and critical minerals producer in the U.S. - interesting to investors due to low production costs at key deposits.

What else is there to read?

- Given the current volatility, Freedom Finance Global analyst Georgy Timoshin has selected five small-caps with growth potential over the next 12 months. Which stocks he recommends? - see "Where to invest $1000 right now: five small-caps with growth prospects".

Mid-cap rare earth producer USA Rare Earth announced the acquisition of Serra Verde Group, the only major producer of all four rare earth elements outside of Asia: neodymium, praseodymium, dysprosium and terbium. The deal makes USA Rare Earth a global leader in the industry, said the head of the company. Quotes of the company rose in trading on April 20, rose by more than 13%.

About 90% of global production of recycled rare earth elements now comes from China, Reuters notes. These materials are critical for electric motors, wind turbines, defense systems and electronics. Investment bank Wedbush advised buying USA Rare Earth shares against this backdrop. The deal between USA Rare Earth and Serra Verde poses a "direct challenge to [China's] dominance," Noble Capital Markets noted.

Shares of cannabis-related companies rose sharply on April 22 following reports of a possible easing of regulation in the United States. Barron's explains that the DOJ may move marijuana from Schedule I to Schedule III, which would simplify access to funding and research. Against that backdrop, Canopy Growth and Tilray Brands securities jumped 21% and 15%, respectively, while the AdvisorShares Pure US Cannabis ETF added about 22%.

Quotes of psychedelics producers also showed strong growth after US President Donald Trump's decree aimed at accelerating research and expanding access to psychedelics in the treatment of PTSD (post-traumatic stress disorder). The document suggests creating a mechanism to access experimental drugs before they are registered. Several Wall Street analysts called it an important moment for the sector. The securities of British Compass Pathways jumped the most: its American depositary receipts rose by 42% to $9.5 on April 20. Shares of the American biotech AtaiBeckley rose 21.6% to $4.9, the highest share price at the close of trading in almost a year.

Chip makers Skyworks Solutions and Qorvo have received an upgrade from investment bank Barclays to "buy": analysts believe the companies could benefit from the launch of a foldable iPhone in 2026. Price targets suggest upside potential of around 13-18%, although the Wall Street consensus remains more subdued.

Goldman Sachs advised five energy companies amid geopolitical volatility. Among the ideas is mid-cap Golar LNG, which is developing floating LNG terminals. The target price from Goldman Sachs is $60, which implies a potential upside of almost 14.5% to the stock's closing price on April 24.

In the software segment, the Motley Fool analyst recommends GitLab: the stock is down more than 40% YTD, yet the company continues to grow - revenue increased 26% in the last fiscal year - making valuations, in his opinion, "incredibly low."

Yesway, which operates a chain of 449 convenience stores in the U.S., raised $280 million in its IPO by offering 14 million shares at $20, the lower end of the range. Yesway has positioned itself as one of the fastest-growing retailers and plans to open about 130 new stores in the next five years.

The Elmet Group raised $120 million by offering 8.6 million shares at $14, the top of the range. The company manufactures critical components for the defense, aerospace and energy industries and describes itself as the only vertically integrated producer of pure tungsten and molybdenum materials in the United States.

Trading in shares of small nuclear reactor developer X-Energy, whose investors include technology giant Amazon, has started in the Freedom system. Listing on Nasdaq under the ticker XE began on April 24. The company raised $1.02 billion in its IPO, placing shares above the range, with a valuation of about $9.1 billion.