The market may be roiling, but there's still opportunity in smaller-cap stocks, said Chris Terry, senior equity analyst for the Hodges Small Cap Fund (HDPSX) - Get Report .

J.C. Penney (JCP) - Get Report shares are up 18% this year, despite extreme negative sentiment in the stock, including over a third of the shares being sold short. Terry said the short-sellers could be in for even more trouble.

"If things go well and they execute well, we think ultimately they get to $2 a share of earnings power. To us, that takes the stock from $7 to $20 a share over the next few years," said Terry.

The Hodges Small Cap Fund is down 12% thus far in 2016, according to fund-tracker Morningstar. The $1.4 billion fund has returned an average of 7.8% annually over the past five years, outpacing 91% of its Morningstar peers.

Terry is also bullish on American Eagle Outfitters (AEO) - Get Report , which has seen its shares drop around 8% so far in 2016. He said the heavily shorted teen retailer has tremendous turnaround potential. Inventories at the company are in good shape, in his view, and margins are moving in the right direction.

"We think the stock will continue to work as they generate positive same store sales this year," said Terry.

Strong early boat show performance has Terry positive on MarineMax (HZO) - Get Report , which is down 6% in 2016. Despite all the talk of an imminent recession, Terry said orders have been solid for the boat-maker.

"We think they get up to $2 or $3 a share of earnings power and this stock could be a double," said Terry.

Wabash National's (WNC) - Get Report stock is flat so far this year, and is now trading around $12 a share. Terry said the trailer-maker's stock is tremendously undervalued and new markets are beckoning.

"We think the stock could trade up to $20 a share if not higher over the next few years as they further diversify the business," said Terry.