Two strategies, four small caps from Freedom for February and beyond

In the autumn, Freedom Broker analysts noted that a Goldilocks mode had begun to take effect in the U.S. economy – a combination of steady growth, normalized inflation, and a labor market supported by a neutral-to-soft policy by the Fed. Under such conditions, two strategies remain the most logical and advisable: investing in dividend stocks amid falling rates or in growth stocks while business activity remains robust, according to Vadim Merkulov, director of research at Freedom Finance Global.

Despite the strong performance of the small-cap segment since the beginning of the year – the Russell 2000 index has added more than 6%, according to data as of February 2 – Merkulov sees no signs of a trend reversal and recommends treating temporary corrections as opportunities to build positions.

Shares of companies involved in critical minerals and industrial metals stand to benefit from shifting industrial policy priorities. In 2026, the administration of U.S. President Donald Trump has consistently emphasized the need to build sustainable supply chains and reduce dependence on external sources – primarily China and Russia. In this context, critical minerals are viewed not merely as raw materials, but as a key element of national security and long-term industrial strategy.

NioCorp

NioCorp (NIB) is a development-stage company operating in the critical minerals segment. Its Elk Creek project in Nebraska is considered one of the few primary sources of niobium in North America and has the potential to produce scandium and titanium by-products, which improves the project’s economics. The strategic importance of Elk Creek is reinforced by deglobalization and friend-shoring policies, as the U.S. seeks to reduce its dependence on foreign supplies of critical metals. Additional support comes from the prospect of financing from the U.S. Export-Import Bank, as well as the scale of the resource base and the long life of the deposit.

If the project successfully transitions from development to construction, Elk Creek could emerge as a key North American asset in a critical metals niche, with long-term demand from the defense, energy, and high-tech sectors.

NioCorp plans to begin construction of the mine portal in the first quarter of 2026, marking a shift from the planning stage to practical implementation. Such a step reduces execution risk and is generally viewed by the market as a positive factor for valuation. The next financial report is expected tentatively on Friday, February 6, when the company is scheduled to release results for the second quarter of its fiscal 2026, along with updated guidance on its cash runway and capital priorities. Freedom Broker sets a 12-month target price of $8.70 per share, implying upside of about 40% versus the current level.

Western Copper and Gold Corporation

Western Copper and Gold (WRN) is a Canadian development-stage mining company focused on the Casino project in the Yukon, one of the largest copper and gold deposits in North America. The project contains significant reserves of copper, gold, molybdenum, and silver, positioning the company as a potential supplier of critical metals for the global energy transition.

Strategic partnerships are a key advantage. In 2023, Rio Tinto invested CAD39.2 million and Mitsubishi Materials CAD21.3 million in the project. These investments provide technical expertise and financial backing, increasing the likelihood of successful development and making Western Copper a potential takeover candidate. The FactSet consensus estimate for the stock’s fair value over the next year is $5.06 per share, implying upside of nearly 54% versus the Monday close.

Small-cap defense stocks may benefit from geopolitical shifts and the Trump administration’s intention to increase defense spending to $1.5 trillion. Unlike large contractors, which are often constrained by regulatory and financial considerations, niche subcontractors can benefit from rising order volumes and accelerated modernization of defense infrastructure.

Espey Manufacturing & Electronics

Espey Manufacturing & Electronics (ESP) is a small U.S. engineering and manufacturing company specializing in power electronics and electromechanical systems for mission-critical applications. The company designs and produces specialized power supplies, power converters, and distribution and control units, and serves as a key supplier to leading defense prime contractors. Its products are used not only in military systems, but also in industrial transportation applications that require high reliability.

Future revenue visibility is supported by a record order backlog of more than $140 million, up about 40% year over year. This portfolio of confirmed contracts underpins strong predictability, with the company expecting to fulfill $49.1 million in orders in fiscal 2026 alone. Espey carries no debt, which allows for an active capital-return policy. The company increased its regular dividend for fiscal 2025 to $1.00 per share, up from $0.68 per share in fiscal 2024. Freedom Broker analysts place a 12-month target price of $61 per share on the stock, implying upside of about 13.5%.

M-tron Industries

Mtron Industries (MPTI) designs and manufactures radio-frequency components for frequency and spectrum control. The company works with leading defense prime contractors and is well positioned to benefit from rising demand in commercial avionics. Its components are used on Boeing and Airbus aircraft, and its customer base includes Lockheed Martin, Northrop Grumman, Raytheon Technologies, and BAE Systems.

An additional growth driver is the ongoing renewal of Mtron’s product portfolio, supported by elevated investment in R&D and capex. About 30% of fiscal 2024 revenue was generated by products launched since 2020, underscoring the role of innovation in driving future growth. According to Freedom Broker analysts, the stock carries a 12-month target price of $71 per share, implying upside of roughly 8%.