The Russell 2000 Index (RUT), a widely followed benchmark of small-cap firms, typically exhibits higher volatility than its larger-cap peers, appealing more to risk-tolerant investors. But while small-caps have led the charge in past bull markets, the RUT has been sluggish so far amid the artificial intelligence (AI) revolution. The S&P 500 Index ($SPX) has gained 24% in the past 52 weeks, compared to RUT's 15.7% increase. In 2024, while the SPX has maintained its upward trajectory with a 6.9% gain, RUT is down more than 1%%.
However, not all small-caps are underperforming. Maybe that’s why, after initially forecasting a 9% gain for the group during the first six months of 2024, Goldman Sachs (GS) is now urging investors to be “selective” on small caps.
With that in mind, here's a look at five small caps outshining the RUT and SPX on a YTD basis, with more upside in the forecast from bullish analysts.
Small-Cap Stock #1: Mission Produce
Mission Produce Inc (AVO), headquartered in Oxnard, California, is a global leader in the sourcing, farming, packaging, and distribution of avocados, mangoes, and blueberries. Valued at $812.6 million by market cap, it offers various services, including ripening, packing, logistical management, and market insights to its clients.
AVO stock is up 2.7% over the past 52 weeks and 12.4% on a YTD basis.
Analysts are optimistic about Mission Produce stock's prospects, with a unanimous “Strong Buy” rating from the two analysts in coverage. The mean target price of $14 indicates expected upside of 23.5%.
Small-Cap Stock #2: Geo Group
Florida-based Geo Group Inc (GEO), with a market cap of $1.9 billion, is a government service provider that specializes in design and support services for secure facilities and processing centers worldwide - namely, private prisons. It offers a full spectrum of innovative solutions to government agency partners, which gives GEO a unique competitive advantage in capturing future quality growth opportunities.
GEO stock is up 104.3% over the past 52 weeks, and 37.3% on a YTD basis.
On March 14, Geo Group Executive Chairman George Zoley purchased 50,000 shares of the company at an average price of $12.4805 per share, totaling about $624,025. The purchase increased Zoley's stake in the company to 3.0177%. This was the first time in nearly three years that Zoley, or any insider for that matter, has made a move like this. This signals a strong vote of confidence, which could be a bullish sign.
Analysts remain upbeat about Geo Group stock, with a unanimous “Strong Buy” rating from the three analysts in coverage. The average price target of $19.25 suggests a 29.5% upside potential from its current price.
Small-Cap Stock #3: Lands' End
Dodgeville, Wisconsin-headquartered Lands' End (LE) operates as a digital retailer of apparel, swimwear, outerwear, accessories, footwear, home products, and uniforms in the U.S., Europe, Asia, and internationally.
Valued at $410.6 million by market cap, shares of Lands' End have gained 88.6% over the past 52 weeks and 36% on a YTD basis.
Lands’ End stock has a unanimous “Strong Buy” rating from the two analysts in coverage. The average price target of $14 suggests 7.6% upside potential from its current price, while the Street-high price target of $15 indicates an upside potential of 15.3%.
Small-Cap Stock #4: Paysign
Nevada-headquartered Paysign Inc (PAYS), with a market cap of $232 million, provides prepaid card programs, comprehensive patient affordability offerings, digital banking services, and integrated payment processing services for businesses, consumers, and government institutions. Its capabilities include transaction processing, cardholder enrollment, account funding, account management, reporting, and customer service.
Shares of Paysign have rallied 28.6% over the past 52 weeks and 57.5% on a YTD basis.
Paysign stock earns a unanimous "Strong Buy" rating from all four analysts in coverage, with the average price target of $5.38, indicating a roughly 22% upside potential from its current price.
Small-Cap Stock #5: Summit Therapeutics
Summit Therapeutics (SMMT), based in Miami, is a biopharmaceutical company that focuses on the discovery, development, and commercialization of patient, physician, caregiver, and societal-friendly medicinal therapies in the U.S. and the U.K. Its lead candidate, Ivonescimab, is a bispecific antibody targeting immunotherapy and anti-angiogenesis, while its anti-infectives portfolio includes SMT-738 to treat multidrug-resistant infections.
Valued at $2.49 billion by market cap, Summit Therapeutics stock has gained 184.8% over the past 52 weeks and 47.8% on a YTD basis.
Summit Therapeutics stock has a “Strong Buy” rating from the one analyst covering the stock. The price target for Summit is $8, indicating a potential upside of 107.3%.
On the date of publication, Sristi Suman Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
