Target Hospitality Corp., Hudson Technologies Inc., and e.l.f. are among the best small-capitalization stock performers this month. Beauty Inc. and Hudson Technologies Inc. saw their prices more than double in the last 12 months after the Russell 2000 Index of small-cap Russell 2000 Index declined 4% and the Russell 1000 Index dropped by 7%.
So far in 2023, $4.2B has been invested by investors into ETFs and mutual and trade-traded funds (ETFs) focusing on small-cap stocks. This is in contrast to more than $17B outflows from large capital funds. The strong labor-market, and consumer-spending trend could have a positive impact on small-cap stocks which historically outperform other stocks during market recoveries.
Below, we will examine the most popular small-cap stocks. We’ll be looking at three categories: best value; fastest growth; and most momentum. All company data and index data are current as of March 2, 2019. It is possible that some of the companies listed here may have valuations above the $2 billion limit for small-cap Equity. Although they can be seen during volatile periods, these companies are still small-caps. This is because their prices don’t move as fast as they do.
Best Value Small Cap Stocks
These are small-cap stock with the lowest 12-month trailing cost-to earnings (P/E). Low P/E numbers indicate that profits can be returned by shareholders in the form dividends or buybacks.
Sinclair Broadcast Group Inc. This company, which is a multi-media company, owns and operates 185 television stations in 86 U.S. cities. It distributes content through digital platforms, multichannel distributors of video programs, and other avenues.
Jackson Financial Inc. A financial holding organization that offers annuities nationwide to retail investors. In February, the company declared a dividend of 62c for common shares. This was nearly 13% above the previous year’s dividend. It is payable to shareholders March 23.
iStar Inc. An investment company that provides corporate net-lease financing services. The company had a net loss in excess of $87million for the three months ended 2022.
Stocks in small-caps that are growing the fastest
These are the most popular small-cap stocks. They were ranked using a growth model which scores companies based a 50/50 ratio of their most recently quarterly year-overyear (YOY), revenue growth percentage and YOY earnings/share growth.
For a company to succeed, sales and earnings will be critical. A company’s success is dependent on its sales and earnings. Therefore, a ranking based only on one growth metric can be affected by accounting anomalies that occurred in that quarter (such tax changes or restructuring costs), which could make the ranking unrepresentative. Companies that experienced a quarterly increase in revenue or earnings of more than 2500% were considered outliers.
DMC Global Inc. This is an holding company that provides architectural products, metal manufacturing and well-completion solutions.
Vertex Energy Inc. Vertex Energy specializes in environmental services and energy transition. It recycles industrial refuse streams and produces and sells alternative fuels and conventional gasoline. Vertex closed the sale of Heartland, its used motor oil collection & recycling business, to GFL Environmental for $90 Million in February.
Fresh Del Monte Produce Inc. Del Monte supplies, grows, and sells a range of fruit and other produce throughout the world.
Small-Cap Stocks Have the Most Momentum
These are the stocks in small caps that provided the greatest total return over 12 months.
Target Hospitality This a special rental and services company. It offers rentals and other hospitality services, as well as building and owning housing communities. 9
e.l.f. Beauty: A cosmetics firm that makes and sells lipsticks. Net sales rose by 49% in the fiscal third quarter of 2022. Net sales increased by 49% in the third quarter of fiscal 2022.
Hudson Technologies offers products and services that are related to refrigeration systems. It also offers cloud based management software for chilled-water plants.
Things to Take into Account When Analyzing Small Cap Stocks
Management Qualification A competent management staff is critical for any business, especially a small company trying to establish itself in a market. Potential investors can do basic online research to find out about key executives (CEO) as well as CFO. Do they have success in running successful businesses before? Seek out shares owned by the company’s leadership team. In stock ownership indicates that the company is committed to success. This aligns their interests and those of the shareholders.
Growth Sales Small cap companies tend to have limited cashflow, so they must generate high sales. As a general rule, small-cap investors should be looking for stocks with strong annual revenues growth. This signifies that the company is poised to disrupt its industry and generate future profits. Yahoo! investors can find all this information. This tab displays information about Finance, including the revenue history for the past four fiscal years.
High operating margin. An organization’s operating margin refers to how efficiently it generates profit through its primary operations before paying tax and interest. It is a good thing to look at operating margins that are increasing consistently when you invest in small caps. This shows that the company is good at turning sales and profits.
Advantages to Small-Cap Stocks
Growth Opportunities: Small cap stocks offer significant upside to investors by allowing them to invest early before they become industry leaders. Additionally, small-cap stocks have a lower market cap than big companies like Amazon and Apple. Their share price moves much more slowly than those with market caps over $1 trillion. Wall Street analysts as well as institutional investors may pay more attention to small-cap stocks that show rapid growth. This can boost shareholder returns.
Less Competition by Larger Investors Typically, institutional investors such as banks, hedge fund managers, and REITs stick to large-cap stocks. They overlook many small-cap options. This allows retail investors, who don’t have to compete with Wall Street money, to buy the story behind the company of the future.
