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Russell 2000 Soars 50% in Less Than 3 Months: 5 Top Picks

Nalak Das

Wall Street's turnaround from the coronavirus-induced market mayhem, which started from the last week of March, is gaining momentum barring some minor fluctuations. All three major stock indexes — the Dow , the S&P 500 and the Nasdaq Composite — have gained more than 40% during this time period.

Besides these three large-cap centric indexes, the small-cap specific Russell 2000 Index has been performing strongly in the past three months. Several small-cap stocks have skyrocketed more than 30% in the past month. Here we have selected five with a favorable Zacks Rank and strong growth potential for the near future.  

Small Businesses Suffers the Most

The small businesses suffered the most owing to global outbreak of the deadly coronavirus, which forced the U.S. government to impose lock downs for nearly two months. The economy came to a standstill during that period.

Owing to their predominantly domestic-focused business strategy, these companies are highly dependent on the spending of U.S. consumers as well as businesses. However, the lockdown imposed by a large number of states significantly reduced demand from both individuals and medium and large businesses.

Also, given their small scale of operations, small businesses are generally cash-starved in nature. These organizations operate on a thin profit margin and most new businesses are yet to achieve profitability.

Russell 2000 Skyrockets Defying Coronavirus

The Russell 2000 recorded its recent low of 966.22 on Mar 18 after entering the coronavirus-led bear market on Mar 9. However, from Mar 18 to Jun 4, the index has soared 50.3%, surpassing the performances of its three large-cap centric major peers.

The Trump administration's decision to give unemployment insurance and stimulus checks for retirees as well as a massive restructuring package to small businesses greatly helped in reviving this space.

On Mar 27, the U.S. government released a relief package of $349 billion in forgivable loans to small businesses provided the firms maintain their payrolls. Moreover, in April, the U.S. government approved a $480 billion coronavirus relief package with funding earmarked for devastated small businesses, overwhelmed hospitals and ramp-up of testing nationwide during the pandemic.

Notably, small corporates create a significant amount of jobs in the U.S. economy. More than 50% of the newly created jobs in the private sector originate here. These people constitute a large part of customers for big businesses.

Our Top Picks

We have narrowed down our search to five small-cap stocks that have skyrocketed more than 30% in the past month with strong growth potential and robust earnings estimate revisions. Each of our picks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The chart below shows the price performance of our five picks in the past month.

 

Tutor Perini Corp. TPC provides diversified general contracting, construction management, and design-build services to private customers and public agencies worldwide. It operates through three segments: Civil, Building, and Specialty Contractors.

The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 16.7% over the past 30 days. The stock price has rallied 101.7% in the past month.

Key Energy Services Inc. KEGX operates as an onshore rig-based well servicing contractor in the United States. It operates through Rig Services, Fishing and Rental Services, Coiled Tubing Services, and Fluid Management Services segments.

The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by more than 100% over the past 30 days. The stock price has jumped 63.2% in the past month.

ChannelAdvisor Corp. ECOM offers cloud-based e-commerce solutions and services. It solutions include marketplaces, comparison shopping, paid search, social campaigns, flex feeds, web stores and rich media.

The company has an expected earnings growth rate of 62.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 32.7% over the past 30 days. The stock price has climbed 36.3% in the past month.

SpartanNash Co. SPTN is a food distributor serving military commissaries and exchanges in the United States. It operates in three segments: Food Distribution, Military and Retail. The company has an expected earnings growth rate of 52.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 20.9% over the past 30 days. The stock has surged 34.6% in the past month.

eXp World Holdings Inc. EXPI provides cloud-based real estate brokerage services for residential real estate market in the United States and Canada. It facilitates buyers to search real-time property listings and sellers to list their properties through its website, exprealty.com, and provides buyers and sellers access to a network of professional, agents and brokers.

The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved by more than 100% over the past 30 days. The stock has gained 32.5% in the past month.

Today's Best Stocks from Zacks

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