Tired of the giant Magnificent Seven S&P 500 stocks, yet? Some investors are scrambling to pick up some small-cap stocks left between the cracks.
Seven stocks in the S&P SmallCap 600 index, including industrial Kaman and consumer discretionary stocks Shake Shack and Abercrombie & Fitch, surged 35% or more this year already, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSurge. That's well above the S&P 500's 7.8% gain this year so far.
And that's just the start. "Could attractive valuations provide a catalyst for growth among small-cap and midcap stocks and serve as a fourth bullish factor? Some fund managers say yes," said Robert Maltbie, president of Santa Monica, Calif.-based small-cap research firm Singular Research.
Time For Small Caps To Top The S&P?
Gains from small caps are a bit overdue. The SPDR Portfolio S&P 600 Small Cap ETF gained just 14.1% last year, while the S&P 500 added 24.3%. And this year, despite some huge winners, the Small Cap index is down 0.4% this year.
Small caps have been ignored for so long, though, they're creating some interesting opportunities, Maltbie says. He points out the total market valuation of the entire small-cap Russell 2000 index is less than the multitrillion-dollar values awarded to a few of the Magnificent Seven tech giants.
And that's the opportunity — as some investors are figuring out.
Big Gains In Small Stocks
If you're looking for a giant gain in a small stock, look no further than Kaman. The $1.3 billion company makes all sorts of aircraft parts. Shares are up more than 90% this year, outperforming all other S&P 600 stocks and most S&P 500 ones.
Don't think it's just speculation, either. The company's profit is expected to rise more than 71% this year to 84 cents a share. And in 2025, analysts are calling for another 61.9% jump in profits.
Finding Wins In Consumer Discretionary
Some consumers like to complain things are tough "in this economy," but they're not spending that way. Shares of burger maker $4.1 billion Shake Shack are up more than 40% this year. The company's profit this year is seen rising nearly 38%. Additionally, profit at the company is expected to lift another 38% in 2025.
Another small consumer stock is also rallying. Abercrombie & Fitch, an apparel retailer worth $6.5 billion, has seen its shares rally more than 35% this year. That's coming off a 285% stock gain in 2023. The company is goosing sales by selling to older adults, not just teens. The company's profit is seen jumping more than 22% this year.
Just a few standouts doesn't make a broad small-cap rally. But if these leaders are any indication, they show there's more to making money in the market than just giant S&P 500 stocks.
Big Gains From Small Stocks
Top gainers this year in S&P SmallCap 600 index
| Company Name | Ticker | YTD % ch. | sector |
|---|---|---|---|
| Kaman | 90.9% | Industrials | |
| Powell Industries | 70.5% | Industrials | |
| AdaptHealth | 51.0% | Health Care | |
| Shake Shack | 40.1% | Consumer Discretionary | |
| Ultra Clean Holdings | 36.3% | Information Technology | |
| Abercrombie & Fitch | 35.5% | Consumer Discretionary | |
| DXP Enterprises | 35.3% | Industrials |
