Compared to the massive upside delivered by tech stocks in 2023, thanks largely to the artificial intelligence (AI) frenzy, the performance of the small-cap-focused Russell 2000 Index (RUT) was modest. While the tech-heavy Invesco QQQ Trust (QQQ) has vaulted 49% higher over the past 52 weeks, shares of the RUT-based iShares Russell 2000 ETF (IWM) are up just 7.6% over the same period.
However, with small caps sporting historically low valuations at current levels, Goldman Sachs predicts a strong showing from the Russell 2000 in 2024. According to analysts at the financial institution, the index will outdo its large-cap rivals by delivering a return of about 9% over the next six months and 15% in the next 12 months.
To take advantage of an expected RUT rally, here's a look at 5 stocks from the small-cap index that have scored top ratings from analysts, with positive bottom-line projections for the fiscal year ahead.
1. Aspen Aerogels Stock
Massachusetts-based Aspen Aerogels (ASPN) is a technology leader in sustainability, leveraging its Aerogel Technology Platform™ to optimize performance and safety in electric vehicles (EVs), energy infrastructure, and buildings. Founded in 1998, the company's market cap currently stands just shy of $1 billion.
Aspen stock is up 25.6% over the past year, outperforming the broader RUT.
While ASPN is not yet profitable, analysts are expecting the company's losses to narrow significantly, with a 61.4% improvement expected for FY 2023, eventually arriving at a loss of just $0.13 per share in FY 2024.
Overall, analysts have a rating of “Strong Buy” for ASPN, with a mean target price of $20.89. This denotes an upside potential of roughly 47.6% from current levels. All 9 analysts covering the stock have a unanimous rating of “Strong Buy” for Aspen Aerogels.
2. Semtech Stock
Founded in 1990, Semtech (SMTC) is a California-based leading supplier of analog and mixed-signal semiconductors. They specialize in analog and mixed-signal chips that bridge the gap between the digital and physical worlds, enabling power-efficient solutions in various end markets. Their market cap currently stands at $1.35 billion.
Semtech stock is down 34.4% over the past 52 weeks. However, the shares have filled their October bear gap, and reestablished their footing above the $20 level.
After an expected per-share loss of $0.38 in FY 2024, analysts are expecting Semtech to swing to a full-year profit of $0.11 per share in 2025.
Analysts have a rating of “Strong Buy” for SMTC, with a mean target price of $30.90. This indicates an upside potential of about 50.9% from current levels. Out of 12 analysts covering the stock, 10 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, and 1 has a “Hold” rating.
3. Appfolio Stock
Founded in 2006, California-based Appfolio (APPF) primarily focuses on cloud-based property management software, services, and data analytics for the real estate industry. It currently commands a market cap of about $6.23 billion.
Appfolio stock has rallied 49% over the past year, easily outpacing the RUT as well as the broader S&P 500 Index ($SPX).
Appfolio just reported its first profitable quarter in quite a while, and analysts expect that trend to continue. After an anticipated full-year profit of just $0.04 per share for fiscal 2023, Wall Street is targeting exponential EPS growth to $1.78 for FY 2024.
All five analysts covering APPF have a rating of “Strong Buy” for the stock, with a mean target price of $243.25. This denotes an upside potential of about 40.8% from current levels.
4. Matador Resources Stock
Dallas-based Matador Resources (MTDR) was founded in 2003. The company's focus primarily lies on the exploration, development, and production of oil (CLG24) and natural gas (NGG24), primarily in shale plays. Matador has significant operations in the resource-rich Eagle Ford and Delaware basins. Its market cap currently stands at $6.5 billion.
Matador Resources stock is down 4.5% over the past year. Notably, the stock also offers a dividend yield of 1.47%.
Looking ahead, analysts have estimated EPS growth of 28.7% for fiscal year 2024.
Overall, analysts have a rating of “Strong Buy” for MTDR, with a mean target price of $74.18. This represents an upside potential of about 36.4% from current levels.
Out of 10 analysts covering the stock, 7 have a “Strong Buy” rating, 2 have a “Moderate Buy” rating, and 1 has a “Hold” rating.
5. Gulfport Energy Stock
Founded in 1997, Oklahoma-based Gulfport Energy (GPOR) is engaged in the exploration and production of natural gas and crude oil, primarily in the United States. Initially concentrating on the West Cote Blanche Bay field in Louisiana, the company has expanded its operations to other gas-producing regions like the Appalachia and SCOOP/Springer basins. Its market cap currently stands at $2.36 billion.
Gulfport stock has been on a winning spree over the past year, rising 66.1% to outpace even the QQQ's returns.
Analysts are estimating strong earnings growth of 48% for fiscal year 2024.
On average, analysts have a rating of “Strong Buy” for GPOR, with a mean target price of $158.12. This denotes an upside potential of about 25.1% from current levels. Out of 8 analysts covering the stock, 6 have a “Strong Buy” rating and 2 have a “Hold” rating.
