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5 Russell 2000 Stocks That Crushed the Index in 2021
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Following the economic lows in 2020, investors have witnessed a gradual improvement in the financial markets in 2021 with accelerated COVID-19 vaccination drives, increased merger & acquisition activities across various industry verticals and favorable earnings growth.
The pandemic has further witnessed a resurgence of small-cap stocks as startups and small corporations have proved their mettle by driving innovation and generating more revenues with new opportunities as the economy recovers.
Small-Cap Stocks Lead the Way
Large-cap stocks tend to be less volatile, even during rough market conditions. However, given the current uncertainties stemming from the pandemic, small-cap stocks appear to be the preferred choice as they offer huge growth potential and higher returns in the long run.
Moreover, small companies are known to have spurred employment rates in the private sector amid the pandemic-induced market turbulence. With large entities having major international exposure, small and mid-cap companies seem to be relatively better placed than their larger peers to tap local talents and capitalize on regional supply chain mechanism.
About Russell 2000 Index
The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index. It accounts for 10% of the market capitalization of the Russell 3000. A broader section of the core U.S. companies forms an integral part of this index. It is one of the most widely used benchmarks for small-cap equities, making it a barometer for the economy.
Driven by its resilience, the Russell 2000 Index of small-cap stocks surged 140% as of Nov 4, 2021, since it hit rock-bottom levels in March 2020. In 2020, the Russell 2000 Index of small-cap stocks gained 70.9% compared with 44.5% for the large-cap S&P 500 Index.
The Russell 2000 Index reflects the bullish sentiments of the market and has moved up 14.2% on a year-to-date basis. It closed at 2,221.90 on Dec 22. Consequently, it would be prudent to park your hard-earned money on these small-cap stocks for lucrative returns.
Top 5 Performers
We have zeroed in on five such stocks that performed better than the index and are among the top gainers in 2021. These stocks are well poised to gain further in the near term on the back of their higher return potential.
Builders FirstSource, Inc. (BLDR - Free Report) : Headquartered in Dallas, TX, Builders FirstSource is the largest supplier of building materials, manufactured components and construction services. The company operates in more than 550 locations in 39 states all over the United States. Following the merger with BMC Stock Holdings, Inc. on Jan 1, 2021, Builders FirstSource reorganized its organizational structure.
Acquisitions form an important part of Builders FirstSource growth strategy to supplement its organic growth. Before the BMC merger, the company integrated 43 acquisitions since 1998. With accretive investments in digital solutions, BLDR is observing higher demand driven by solid momentum of the housing industry. Also, it is expected to provide greater resources to invest in growth, innovation and non-stop value creation for all its shareholders.
Builders FirstSource sports a Zacks Rank #1 (Strong Buy) and has a VGM Score of A. BLDR delivered a trailing four-quarter positive earnings surprise of 71.5%, on average. The Zacks Consensus Estimate for its next-year earnings has been revised 50.2% upward over the past 60 days. Year to date, the stock has catapulted 98.7% compared with 43.4% growth of the industry.
Sanderson Farms, Inc. : Headquartered in Laurel, MS, Sanderson Farms is a poultry processing company that produces, processes, markets and distributes fresh and frozen chicken products. The company operates 11 hatcheries, nine feed mills and 12 processing plants, and one prepared chicken plant.
With sales of more than $3.5 billion, it is currently the third-largest poultry producer in the United States, processing more than 4.8 billion pounds of meat in fiscal 2020. Sanderson Farms has been strengthening its product portfolio by adding to its vast product pipeline. It is working toward boosting its assortments to meet consumers’ altering tastes and dining preferences. Additionally, it is investing toward augmenting its overall capacity.
Sanderson Farms also flaunts a Zacks Rank #1 and has a VGM Score of A. SAFM delivered a trailing four-quarter positive earnings surprise of 496.3%, on average. The Zacks Consensus Estimate for its next-year earnings has been revised 6.8% upward over the past 60 days. Year to date, the stock has rallied 41.8% compared with 10.1% growth of the industry.
Image Source: Zacks Investment Research
Lattice Semiconductor Corporation (LSCC - Free Report) : Headquartered in Hillsboro, OR, Lattice is a manufacturer of high-performance programmable logic devices. The company sells its products globally in three end market groups — Communications and Computing, Industrial and Automotive, and Consumer.
Lattice shares long-standing strategic relationships with major semiconductor foundries for procuring finished silicon wafers. This enables LSCC to focus its internal resources on product and market development, in turn, eliminating the fixed cost of operating semiconductor manufacturing facilities. The company solves customer problems across the network, from the Edge to the Cloud, across computing, communications, automotive, industrial and consumer markets.
Lattice carries a Zacks Rank #2 (Buy). LSCC delivered a trailing four-quarter positive earnings surprise of 14.5%, on average. The Zacks Consensus Estimate for its next-year earnings has been revised 7.1% upward over the past 60 days. Year to date, the stock has returned 63.1% compared with 41.4% growth of the industry.
Image Source: Zacks Investment Research
Trex Company, Inc. (TREX - Free Report) : Based in Winchester, VA, Trex is a leading manufacturer of wood-alternative composite decking, railing and other outdoor items. Stocked in more than 6,700 retail locations worldwide, Trex outdoor living products deliver a plethora of style options with fewer maintenance requirements than wood. It currently operates in two reportable segments — Trex Residential Products (Trex Residential) and Trex Commercial Products (Trex Commercial).
The expanded addressable market reflects the strength of its brand and product portfolio. Solid sales growth and disciplined SG&A spending act as major tailwinds. With strong demand trends, Trex anticipates double-digit revenue gains in 2022 with higher opportunities related to energy efficiency, modernization and automation. It also prioritizes cost reduction projects and new product development while driving innovation in the global market.
Trex has a Zacks Rank #3 (Hold). The company delivered a trailing four-quarter positive earnings surprise of 5.5%, on average. The Zacks Consensus Estimate for its next-year earnings has been revised 6.6% upward over the past 60 days. Year to date, the stock has gained 57% compared with 31.5% growth of the industry.
Image Source: Zacks Investment Research
Enova International, Inc. (ENVA - Free Report) : Based in Chicago, IL, Enova is a leading financial technology company focused on providing online financial services. As of Dec 31, 2020, the company has completed more than 53.2 million customer transactions and collected nearly 49 terabytes of consumer behavior data, enabling it to better analyze its specific customer base. Some of its financing products and services are installment loans, income share agreements, CSO programs and receivables purchase agreements.
Enova currently provides its services in the United States, the United Kingdom, Canada, Australia and Brazil. It caters to small businesses and capitalizes on its proprietary technology, analytics and customer service capabilities to underwrite and fund loans. Enova’s proprietary underwriting systems leverage advanced risk analytics, including machine learning and artificial intelligence. ENVA has provided more than 7 million customers with more than $40 billion in loans to enhance their financial health.
Enova has a Zacks Rank #3. The company delivered a trailing four-quarter positive earnings surprise of 68.6%, on average. The Zacks Consensus Estimate for its next-year earnings has been revised 6.2% upward over the past 60 days. Year to date, the stock has soared 61.5% compared with 34.9% growth of the industry.
Image Source: Zacks Investment Research
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5 Russell 2000 Stocks That Crushed the Index in 2021
Following the economic lows in 2020, investors have witnessed a gradual improvement in the financial markets in 2021 with accelerated COVID-19 vaccination drives, increased merger & acquisition activities across various industry verticals and favorable earnings growth.
The pandemic has further witnessed a resurgence of small-cap stocks as startups and small corporations have proved their mettle by driving innovation and generating more revenues with new opportunities as the economy recovers.
Small-Cap Stocks Lead the Way
Large-cap stocks tend to be less volatile, even during rough market conditions. However, given the current uncertainties stemming from the pandemic, small-cap stocks appear to be the preferred choice as they offer huge growth potential and higher returns in the long run.
Moreover, small companies are known to have spurred employment rates in the private sector amid the pandemic-induced market turbulence. With large entities having major international exposure, small and mid-cap companies seem to be relatively better placed than their larger peers to tap local talents and capitalize on regional supply chain mechanism.
About Russell 2000 Index
The Russell 2000 Index measures the performance of the 2,000 smallest companies in the Russell 3000 Index. It accounts for 10% of the market capitalization of the Russell 3000. A broader section of the core U.S. companies forms an integral part of this index. It is one of the most widely used benchmarks for small-cap equities, making it a barometer for the economy.
Driven by its resilience, the Russell 2000 Index of small-cap stocks surged 140% as of Nov 4, 2021, since it hit rock-bottom levels in March 2020. In 2020, the Russell 2000 Index of small-cap stocks gained 70.9% compared with 44.5% for the large-cap S&P 500 Index.
The Russell 2000 Index reflects the bullish sentiments of the market and has moved up 14.2% on a year-to-date basis. It closed at 2,221.90 on Dec 22. Consequently, it would be prudent to park your hard-earned money on these small-cap stocks for lucrative returns.
Top 5 Performers
We have zeroed in on five such stocks that performed better than the index and are among the top gainers in 2021. These stocks are well poised to gain further in the near term on the back of their higher return potential.
Builders FirstSource, Inc. (BLDR - Free Report) : Headquartered in Dallas, TX, Builders FirstSource is the largest supplier of building materials, manufactured components and construction services. The company operates in more than 550 locations in 39 states all over the United States. Following the merger with BMC Stock Holdings, Inc. on Jan 1, 2021, Builders FirstSource reorganized its organizational structure.
Acquisitions form an important part of Builders FirstSource growth strategy to supplement its organic growth. Before the BMC merger, the company integrated 43 acquisitions since 1998. With accretive investments in digital solutions, BLDR is observing higher demand driven by solid momentum of the housing industry. Also, it is expected to provide greater resources to invest in growth, innovation and non-stop value creation for all its shareholders.
Builders FirstSource sports a Zacks Rank #1 (Strong Buy) and has a VGM Score of A. BLDR delivered a trailing four-quarter positive earnings surprise of 71.5%, on average. The Zacks Consensus Estimate for its next-year earnings has been revised 50.2% upward over the past 60 days. Year to date, the stock has catapulted 98.7% compared with 43.4% growth of the industry.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Sanderson Farms, Inc. : Headquartered in Laurel, MS, Sanderson Farms is a poultry processing company that produces, processes, markets and distributes fresh and frozen chicken products. The company operates 11 hatcheries, nine feed mills and 12 processing plants, and one prepared chicken plant.
With sales of more than $3.5 billion, it is currently the third-largest poultry producer in the United States, processing more than 4.8 billion pounds of meat in fiscal 2020. Sanderson Farms has been strengthening its product portfolio by adding to its vast product pipeline. It is working toward boosting its assortments to meet consumers’ altering tastes and dining preferences. Additionally, it is investing toward augmenting its overall capacity.
Sanderson Farms also flaunts a Zacks Rank #1 and has a VGM Score of A. SAFM delivered a trailing four-quarter positive earnings surprise of 496.3%, on average. The Zacks Consensus Estimate for its next-year earnings has been revised 6.8% upward over the past 60 days. Year to date, the stock has rallied 41.8% compared with 10.1% growth of the industry.
Lattice Semiconductor Corporation (LSCC - Free Report) : Headquartered in Hillsboro, OR, Lattice is a manufacturer of high-performance programmable logic devices. The company sells its products globally in three end market groups — Communications and Computing, Industrial and Automotive, and Consumer.
Lattice shares long-standing strategic relationships with major semiconductor foundries for procuring finished silicon wafers. This enables LSCC to focus its internal resources on product and market development, in turn, eliminating the fixed cost of operating semiconductor manufacturing facilities. The company solves customer problems across the network, from the Edge to the Cloud, across computing, communications, automotive, industrial and consumer markets.
Lattice carries a Zacks Rank #2 (Buy). LSCC delivered a trailing four-quarter positive earnings surprise of 14.5%, on average. The Zacks Consensus Estimate for its next-year earnings has been revised 7.1% upward over the past 60 days. Year to date, the stock has returned 63.1% compared with 41.4% growth of the industry.
Trex Company, Inc. (TREX - Free Report) : Based in Winchester, VA, Trex is a leading manufacturer of wood-alternative composite decking, railing and other outdoor items. Stocked in more than 6,700 retail locations worldwide, Trex outdoor living products deliver a plethora of style options with fewer maintenance requirements than wood. It currently operates in two reportable segments — Trex Residential Products (Trex Residential) and Trex Commercial Products (Trex Commercial).
The expanded addressable market reflects the strength of its brand and product portfolio. Solid sales growth and disciplined SG&A spending act as major tailwinds. With strong demand trends, Trex anticipates double-digit revenue gains in 2022 with higher opportunities related to energy efficiency, modernization and automation. It also prioritizes cost reduction projects and new product development while driving innovation in the global market.
Trex has a Zacks Rank #3 (Hold). The company delivered a trailing four-quarter positive earnings surprise of 5.5%, on average. The Zacks Consensus Estimate for its next-year earnings has been revised 6.6% upward over the past 60 days. Year to date, the stock has gained 57% compared with 31.5% growth of the industry.
Enova International, Inc. (ENVA - Free Report) : Based in Chicago, IL, Enova is a leading financial technology company focused on providing online financial services. As of Dec 31, 2020, the company has completed more than 53.2 million customer transactions and collected nearly 49 terabytes of consumer behavior data, enabling it to better analyze its specific customer base. Some of its financing products and services are installment loans, income share agreements, CSO programs and receivables purchase agreements.
Enova currently provides its services in the United States, the United Kingdom, Canada, Australia and Brazil. It caters to small businesses and capitalizes on its proprietary technology, analytics and customer service capabilities to underwrite and fund loans. Enova’s proprietary underwriting systems leverage advanced risk analytics, including machine learning and artificial intelligence. ENVA has provided more than 7 million customers with more than $40 billion in loans to enhance their financial health.
Enova has a Zacks Rank #3. The company delivered a trailing four-quarter positive earnings surprise of 68.6%, on average. The Zacks Consensus Estimate for its next-year earnings has been revised 6.2% upward over the past 60 days. Year to date, the stock has soared 61.5% compared with 34.9% growth of the industry.