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Top 5 High-Flying Small-Cap Stocks to Tap Wall Street Rally
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Wall Street has seen an impressive bull run so far this year despite facing intermittent fluctuations related to inflationary pressure. Most of the market participants are concerned about the performance of large-cap stocks. However, small-cap stocks have witnessed a strong rally year to date. The momentum is likely to continue in the rest of 2021.
Of the small-cap stocks that have gained significantly so far this year, we believe that the following five, with a favorable Zacks Rank, still have upside left. These are Inotiv Inc. (NOTV - Free Report) , Sterling Construction Company Inc. (STRL - Free Report) , Level One Bancorp Inc. , Clearfield Inc. (CLFD - Free Report) and Bluegreen Vacations Holding Corp. .
Strong Small-Cap Rally in 2021 So Far
Wall Street has maintained its northbound journey in 2021 so far, after finishing an astonishing 2020 irrespective of the pandemic. The resurgence of the Delta variant of coronavirus, prolonged global supply-chain disruption led by the pandemic and soaring inflationary pressure have failed to derail U.S. stock markets’ upward journey this year.
Year to date, the three large-cap-centric indexes – the Dow, the S&P 500 and the Nasdaq Composite – have rallied 17.4%, 23.8% and 21.9%, respectively. On the other hand, the small-cap-specific Russell 2000 and S&P 600 Indexes have advanced 22% and 30.2%, respectively, in the same time period.
Importance of Small Businesses
Small businesses create a significant number of jobs in the U.S. economy. More than 50% of the newly created jobs in the private sector originate from these businesses. These people constitute a large part of customers for big businesses.
Moreover, small companies are a major part of the supply chain management systems of large companies for innovative and technologically superior inputs. Additionally, small businesses more often than not form a vital cog in corporate America's customer base.
Given their small-scale of operations, these businesses are generally cash-starved. These organizations operate on a thin profit margin and most new businesses will take time to achieve profitability. Consequently, the reopening of the economy immensely benefited small businesses.
Future Catalysts
As new cases of the highly-infectious Delta variant of coronavirus have been subdued since early September, the reopening-oriented small businesses are benefiting extensively. However, a shortage of skilled manpower and prolonged disturbance in the supply-chain system took a toll on the small business operators.
Despite supply-side bottlenecks, both business spending and consumer spending remained firm in the third quarter of 2021. Massive pent-up demand for both intermediary and final products ramped up small business activities. Holiday season sales in the fourth quarter are likely to boost small businesses.
In its latest projection on Nov 10, the Atlanta Fed stated that the U.S. economy will grow by 8.2% in fourth-quarter 2021. This indicates an improvement from the initial estimate of 6.6% on Oct 29. Better-than-expected nonfarm payrolls in October, record-high manufacturing and services PMIs and soaring consumer confidence have led to a solid start to fourth-quarter U.S. GDP growth. Robust GDP growth will significantly benefit small businesses.
Our Top Picks
We have narrowed down our search to five small business operators that have popped more than 20% in the past month with more upside left for the rest of 2021. These stocks have seen positive earnings estimate revisions in the past seven days, indicating that the market is expecting these companies to do solid business in the rest of 2021. Each of our picks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our above-mentioned five picks in the past month.
Image Source: Zacks Investment Research
Inotiv provides drug discovery and development services to the pharmaceutical, chemical, and medical device industries; and sells analytical instruments to the pharmaceutical development and contract research industries. NOTV operates through two segments, Contract Research Services and Research Products.
Inotiv has an expected earnings growth rate of more than 100% for the current year (ending September 2022). The Zacks Consensus Estimate for current-year earnings has improved 87% over the past seven days. The stock price has soared 47.3% in the past month.
Level One Bancorp operates as a bank holding company for Level One Bank that provides business and consumer financial services in Michigan. LEVL’s product portfolio includes lines of credit, term loans, leases, commercial mortgages, SBA loans, export-import financing, treasury management, private banking, personal savings, checking accounts and consumer loans.
Level One Bancorp has an expected earnings growth rate of 51.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1% over the past seven days. The stock price has jumped 36% in the past month.
Clearfield designs and manufactures the FieldSmart fiber management platform including its latest generation Fiber Distribution System and Fiber Scalability Center. CLFD also provides a complete line of fiber and copper assemblies for controlled and outside plant environments.
Clearfield has an expected earnings growth rate of 25.9% for the current year (ending September 2022). The Zacks Consensus Estimate for current-year earnings has improved 8.8% over the past seven days. The stock price has climbed 28.9% in the past month.
Bluegreen Vacations Holding operates as a vacation ownership company. BVH markets and sells vacation ownership interests and manages resorts in leisure and urban destinations, including Orlando, Las Vegas, Myrtle Beach, Charleston and New Orleans, and others.
Bluegreen Vacations Holding has an expected earnings growth rate of more than 100% for the current-year. The Zacks Consensus Estimate for current year earnings has improved 18.3% over the past seven days. The stock price has appreciated 26.5% in the past month.
Sterling Construction is a leading heavy civil construction company that specializes in the building and reconstruction of transportation and water infrastructure projects in the United States. STRL’s transportation infrastructure projects include highways, roads, bridges, airfields, ports and light rail. Its water infrastructure projects include water, wastewater and storm drainage systems.
Sterling Construction has an expected earnings growth rate of 41.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 7.5% over the past seven days. The stock has rallied 24.9% in the past month.
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Top 5 High-Flying Small-Cap Stocks to Tap Wall Street Rally
Wall Street has seen an impressive bull run so far this year despite facing intermittent fluctuations related to inflationary pressure. Most of the market participants are concerned about the performance of large-cap stocks. However, small-cap stocks have witnessed a strong rally year to date. The momentum is likely to continue in the rest of 2021.
Of the small-cap stocks that have gained significantly so far this year, we believe that the following five, with a favorable Zacks Rank, still have upside left. These are Inotiv Inc. (NOTV - Free Report) , Sterling Construction Company Inc. (STRL - Free Report) , Level One Bancorp Inc. , Clearfield Inc. (CLFD - Free Report) and Bluegreen Vacations Holding Corp. .
Strong Small-Cap Rally in 2021 So Far
Wall Street has maintained its northbound journey in 2021 so far, after finishing an astonishing 2020 irrespective of the pandemic. The resurgence of the Delta variant of coronavirus, prolonged global supply-chain disruption led by the pandemic and soaring inflationary pressure have failed to derail U.S. stock markets’ upward journey this year.
Year to date, the three large-cap-centric indexes – the Dow, the S&P 500 and the Nasdaq Composite – have rallied 17.4%, 23.8% and 21.9%, respectively. On the other hand, the small-cap-specific Russell 2000 and S&P 600 Indexes have advanced 22% and 30.2%, respectively, in the same time period.
Importance of Small Businesses
Small businesses create a significant number of jobs in the U.S. economy. More than 50% of the newly created jobs in the private sector originate from these businesses. These people constitute a large part of customers for big businesses.
Moreover, small companies are a major part of the supply chain management systems of large companies for innovative and technologically superior inputs. Additionally, small businesses more often than not form a vital cog in corporate America's customer base.
Given their small-scale of operations, these businesses are generally cash-starved. These organizations operate on a thin profit margin and most new businesses will take time to achieve profitability. Consequently, the reopening of the economy immensely benefited small businesses.
Future Catalysts
As new cases of the highly-infectious Delta variant of coronavirus have been subdued since early September, the reopening-oriented small businesses are benefiting extensively. However, a shortage of skilled manpower and prolonged disturbance in the supply-chain system took a toll on the small business operators.
Despite supply-side bottlenecks, both business spending and consumer spending remained firm in the third quarter of 2021. Massive pent-up demand for both intermediary and final products ramped up small business activities. Holiday season sales in the fourth quarter are likely to boost small businesses.
In its latest projection on Nov 10, the Atlanta Fed stated that the U.S. economy will grow by 8.2% in fourth-quarter 2021. This indicates an improvement from the initial estimate of 6.6% on Oct 29. Better-than-expected nonfarm payrolls in October, record-high manufacturing and services PMIs and soaring consumer confidence have led to a solid start to fourth-quarter U.S. GDP growth. Robust GDP growth will significantly benefit small businesses.
Our Top Picks
We have narrowed down our search to five small business operators that have popped more than 20% in the past month with more upside left for the rest of 2021. These stocks have seen positive earnings estimate revisions in the past seven days, indicating that the market is expecting these companies to do solid business in the rest of 2021. Each of our picks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our above-mentioned five picks in the past month.
Inotiv provides drug discovery and development services to the pharmaceutical, chemical, and medical device industries; and sells analytical instruments to the pharmaceutical development and contract research industries. NOTV operates through two segments, Contract Research Services and Research Products.
Inotiv has an expected earnings growth rate of more than 100% for the current year (ending September 2022). The Zacks Consensus Estimate for current-year earnings has improved 87% over the past seven days. The stock price has soared 47.3% in the past month.
Level One Bancorp operates as a bank holding company for Level One Bank that provides business and consumer financial services in Michigan. LEVL’s product portfolio includes lines of credit, term loans, leases, commercial mortgages, SBA loans, export-import financing, treasury management, private banking, personal savings, checking accounts and consumer loans.
Level One Bancorp has an expected earnings growth rate of 51.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1% over the past seven days. The stock price has jumped 36% in the past month.
Clearfield designs and manufactures the FieldSmart fiber management platform including its latest generation Fiber Distribution System and Fiber Scalability Center. CLFD also provides a complete line of fiber and copper assemblies for controlled and outside plant environments.
Clearfield has an expected earnings growth rate of 25.9% for the current year (ending September 2022). The Zacks Consensus Estimate for current-year earnings has improved 8.8% over the past seven days. The stock price has climbed 28.9% in the past month.
Bluegreen Vacations Holding operates as a vacation ownership company. BVH markets and sells vacation ownership interests and manages resorts in leisure and urban destinations, including Orlando, Las Vegas, Myrtle Beach, Charleston and New Orleans, and others.
Bluegreen Vacations Holding has an expected earnings growth rate of more than 100% for the current-year. The Zacks Consensus Estimate for current year earnings has improved 18.3% over the past seven days. The stock price has appreciated 26.5% in the past month.
Sterling Construction is a leading heavy civil construction company that specializes in the building and reconstruction of transportation and water infrastructure projects in the United States. STRL’s transportation infrastructure projects include highways, roads, bridges, airfields, ports and light rail. Its water infrastructure projects include water, wastewater and storm drainage systems.
Sterling Construction has an expected earnings growth rate of 41.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 7.5% over the past seven days. The stock has rallied 24.9% in the past month.