Megacaps such as Nvidia, Meta Platforms, Alphabet and Amazon.com trade at hefty prices and have had a massive run this year.
But looking just at last week on IBD MarketSurge, small caps have been gathering speed. The small-cap Russell 2000 index scored a strong weekly gain of 4.5%, leaving big megacaps far behind. The Nasdaq and the S&P 500 posted just a 1.7% increase.
That makes it worthwhile to cast our investing net beyond the biggest leaders.
In the growth IBD 50 list, lesser-known small-cap biotech stock GeneDx Holdings has been quietly making its way to a new high and shows two clear signals of market outperformance: an ideal Relative Strength Rating and a rising relative strength line.
GeneDx Holdings is Monday's selection for IBD 50 Stocks To Watch.
GeneDx started the year as a cheap stock, trading at less than 3 per share on Jan. 2. Shares have skyrocketed since.
Investor's Business Daily labels stocks that trade at less than $10 per share "cheap" and usually not good investment choices. But some of these low-priced stocks come with strong fundamental and technical ratings that eventually push the stock price to double digits.
GeneDx is one of the former ultracheap stocks that have outstanding marks for technical strength, combined with strong fundamental performance.
Biotech Stock Soars 50% On Earnings
The weekly IBD MarketSurge chart shows truly impressive action: The stock did not break the 10-week moving average even once after it cleared that level in December, following its November 2023 low of 1.16. From that low, the stock is up 6,685% as of Friday's closing price of 78.71. Year to date, the once-cheap stock has gained 2,762%.
That kind of continuous bullish action could make a stock look extended and way past a buy point or even buy zone. But an earnings gap-up on Oct. 29 could provide an aggressive entry. The biotech stock soared 50% that day and is now trying to build a base with a possible buy point of 89.11.
Third quarter revenue grew 44% to $76.9 million while earnings of 4 cents per share reversed a loss of 82 cents per share in the year-ago quarter.
For the full year, the company increased its revenue guidance at the midpoint to $287 million from $260 million.
A second-quarter loss weighs on the stock's EPS Rating, which is just 74. But the Relative Strength Rating is the best possible 99. A rising relative strength line adds a strong bullish touch to the chart as well. The Composite Rating is 90 out of 99.
GeneDX provides genetic testing services in patients with symptoms such as slow mental development that suggest a disorder in the "energy factories" of human cells, or the mitochondria. The biotech company also applies genome sequencing using genetic data for diagnosing pediatric epilepsy and autism spectrum disorder.
More funds have been net buyers of the stock over the past three quarters. The stock also holds an Accumulation/Distribution Rating of B+.
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