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Small cap stocks are listed companies that have market capitalizations ranging from $300 million to $2 billion. Since the share prices of these companies can have big fluctuations over a short period of time, companies with market caps of up to $10 billion are also found in the small cap universe. Some of the stocks classified as small cap include cloud computing business Fastly Inc. (FSLY), fitness and wellness company Tivity Health Inc (TVTY), and gaming firm Century Casinos Inc. (CNTY). As reflected by the Russell 2000 Index (RUT), small cap stocks have lagged behind the S&P 500, posting a 12-month price change of 20.5%, compared with 27.9% for the S&P. All numbers are as of January 6, 2020.
Below, we’ll look at the top small cap stocks for value, growth, and momentum for January 2020.
Small Cap Stocks with the Best Value
Here are the small cap stocks in the S&P 500 with the lowest 12-month trailing price-to-earnings (P/E) ratio in the sector. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
- Southwestern Energy Co.: Southwestern Energy explores, develops, and produces natural gas and crude oil products, focusing on Texas. The firm has set a goal of free cash flow neutrality by the end of next year. Also, Q3 2019 saw an improvement of diluted earnings per share over Q3 2018, moving from a $0.05 loss to earnings of $0.09.
- Gulfport Energy Corp.: Gulfport Energy is an oil and gas exploration company whose principal producing properties are on the Louisiana Gulf Coast. While Gulfport reported a loss of $0.31 per share in Q3 2019, free cash flow was $130.4 million, up from $23.8 million in Q3 2018.
- California Resources Corp.: California Resources is an energy company involved in oil and natural gas exploration and production. As its name suggests, the company focuses its efforts on sites in California. Although the company’s stock remains significantly below its 52-week high, it received a boost in early November based on strong Q3 2019 earnings figures, including adjusted profit of $0.35 per share (ahead of analyst expectations of a loss of $0.50 per share).
Small Cap Stocks with the Fastest Earnings Growth
Here are the small cap stocks in the S&P 500 with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
- Cannae Holdings Inc.: One of many holding companies in the universe of small cap stocks, Cannae Holdings owns a group of subsidiary companies in the restaurant, health care, and financial services industries. In Q3 2019, the company reported EPS of $0.64 per share, up from $0.02 in Q3 2018. Beginning in September 2019, Cannae launched a 3-year stock repurchase plan under which the company may buy back up to 5 million shares of common stock.
- Varex Imaging Corp.: Varex Imaging designs, manufactures, and markets X-ray imaging devices for medical and industrial applications, including those used for airport and cargo screening. For its fiscal year 2019, which ended on Sept. 29, Varex experienced delays in filing its annual report on SEC Form 10-K, which temporarily put it out of compliance with Nasdaq rules requiring timely filing of financial reports. Varex subsequently reported earnings per share of $0.21 in Q4 of FY2019, up sharply from $0.01 in Q4 of FY2018. However, annual EPS have been on a downtrend for the last five fiscal years: $0.40 in fiscal 2019, $0.72 in 2018, $1.36 in 2017, $1.82 in 2016, and $2.12 in 2015.
- Ares Management Corp.: Asset management company Ares Management focuses on private equity, direct lending, tradeable credit, and more. In Q3 2019, EPS was $0.23, up from $0.09 in Q3 2018, as management fees grew by 23% and its carried interest allocation soared by 486%.
Small Cap Stocks with the Most Momentum
These are the small cap stocks in the S&P 500 that had the greatest total return over the past 12 months.
|Small Cap Stocks with the Most Momentum|
|Price ($)||Market Cap ($)||12-Month Trailing Price Change (%)|
|Axsome Therapeutics Inc. (AXSM)||94.48||3.5B||3,492|
|Kodiak Sciences Inc. (KOD)||67.70||2.6B||797|
|Parker Drilling Co. (PKD)||22.51||338.7M||45*|
|S&P 500 (SPY)||—||—||27.9|
|Russell 2000 (RUT)||—||—||20.5|
- Axsome Therapeutics Inc.: Axsome Therapeutics is a biopharmaceutical company developing drug treatments for central nervous system disorders as well as other health issues. Much of Axsome’s stock price appreciation throughout 2019 may be linked to the promise of one of its lead drugs, AXS-05, which has seen numerous clinical trial successes as a therapeutic for agitation associated with Alzheimer’s, as well as treatment-resistant depression.
- Kodiak Sciences Inc.: Kodiak Sciences develops therapies for high-prevalence diseases of the eye. Kodiak believes that its lead product, KSI-301, is a potential best in class treatment for macular degeneration and diabetic retinopathy, while it also has a pipeline of treatments for other ophthalmic diseases in development.
- Parker Drilling Co.: Parker Drilling supports oil and gas exploration companies with drilling services on land and offshore. Parker emerged from Chapter 11 bankruptcy protection in March 2019. The price gain in the table above is since April 3, 2019, when shares of the restructured company began trading. While in bankruptcy, Parker traded on the OTC Pink Marketplace under the symbol PKDSQ. Its final price in 2019 under this symbol was $0.24. The restructured company reported EPS of $0.27 in Q3 2019, down from $0.31 in Q2 2019, but significantly better than the loss of $7.70 per share sustained by the predecessor company in Q3 2018.
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