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Top 5 Small-Cap Stocks to Consider Buying

2. Wendy's (WEN)

This past week marks the one-year anniversary for Emil Brolcik, the new CEO of this fast-food chain.

During the past year, the proven industry veteran has taken a close look at operations and ultimately unveiled a turnaround strategy, which I wrote about here.

The market remains dubious, as shares are exactly where they were a year ago. But as I cautioned back in January, turnarounds can take several years to play out.

On a purely qualitative basis, Brolick's vision for Wendy's makes ample sense. Focus on quality ingredients, and you can separate from the fast-food pack.

Whether Brolick can execute on his plan is still an open question, but the earnings leverage in this business model makes this stock a potentially strong gainer during the next few years.

3. Gafisa (GFA)

I wrote about this Brazilian homebuilder roughly a month ago, and it still appears to offer high risk and high reward.

Simply put, the Brazilian housing sector is currently retrenching after a building boom that led to a housing glut.

The excesses are being worked off, and with the Brazilian economy expected to get a major boost from the World Cup and the Olympics in coming years, the housing market should spin back to life in a year or so.

Meanwhile, a drop from $18 to $4 in the past 18 months has pushed this out-of-favor stock into value territory.

Shares now trade for not much more than book value of $3.31 a share. And this figure has been heavily marked down from write-offs that likely undervalue Gafisa's real estate holdings when the Brazilian economy turns back up.

4. Celsion (CLSN)

This is the only biotech stock I'm focusing on right now.

Celsion has developed ThermoDox, which is a heat-activated drug delivery technology currently in Phase III testing for liver cancer.

As with many biotechs, the company must keep reloading the balance sheet with more cash to stay afloat, which has heavily pressured shares.
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