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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 far behind the S&P 500, posting a 12-month gain of 14.2% compared to 26.8% for the S&P. These numbers on market performance and in the three tables below are as of January 29, 2020.
Below, we’ll look at the top small cap stocks for value, growth, and momentum for February 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. As part of its environmental stewardship initiative, Southwestern Energy announced last quarter that it had returned more than 10 billion gallons of freshwater to the environment.
- 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, posting adjusted profit of $0.35 per share. That beat analyst expectations of a loss of $0.50 per share.
- Penn Virginia Corp.: Oil and gas operation Penn Virginia explores, develops, and produces natural gas and related products across the U.S.
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.
- Kaman Corp.: Kaman is an aerospace company focused on aircraft manufacturing and the design and fabrication of advanced technological systems. In November, Kaman announced that it would acquire Bal Seal Engineering for $330 million, enhancing its product lineup and diversifying its offerings.
- Washington REIT: As the name suggests, Washington is a real estate investment trust. REITs are vehicles that owns and operate real estate as a means of providing individual investors access to income from these portfolios. Washington’s portfolio includes commercial, industrial, and residential real estate in Washington, DC.
- Earthstone Energy Inc.: An independent energy company, Earthstone develops and operates oil and gas properties in Texas. Earthstone estimates that its annual sales volumes grew 35% YOY in 2019.
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.
- Axsome Therapeutics Inc.: Axsome Therapeutics is a biopharmaceutical company developing drug treatments for central nervous system disorders as well as other health issues. As one of the best-performing stocks of 2019, much of Axsome’s stock price appreciation throughout the year may be linked to the promise of one of its lead drugs, AXS-05. This drug 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.
- EverQuote Inc.: EverQuote is an online marketing firm with a platform that connects customers with auto insurance agents and carriers. It serves customers and clients throughout the U.S.
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