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Small Caps Yet to Hit Highs: 5 Stocks to Buy Right Now
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The recent rebound in oil prices, improvement in job numbers and favorable manufacturing data have all infused some optimism in the market. Investor confidence was further bolstered with the International Monetary Fund affirming “negligible” impact of Brexit on U.S. markets and the positive influence of the overwhelming victory of Japan’s Prime Minister Shinzo Abe. Additionally, the CBOE Volatility Index (VIX) has declined 3% year to date to nearly 13.5, reflecting low volatility in the U.S. markets.
While these factors have already propelled a number of large and mid-cap stocks to their all-time highs, the small-cap space is still largely untapped. This is because, investors resorted to safer bets first.
Small-cap stocks are considered inherently risky on account of low trading liquidity, limited access to capital, brief operational history and lack of publicly available information.
However, small cap stocks with good fundamentals have much higher growth potential than their large-cap counterparts. As an evidence, the Vanguard Small Cap ETF clocked a return of 7.75%, conveniently topping the S&P 500's 5.51% over the last 10 years.
Historically, small caps have outperformed in an expanding economy when the risk of recession is low. That is why many believe this is the right time to build positions in small-cap stocks instead of continuing to invest in the mid- and large-caps that have already appreciated to their highs.
Nonetheless, identifying the right small-cap stocks could be quite a challenge.
Here, we have handpicked 5 attractive small cap stocks that are yet to reach their highs with the help of our new style score system.The stocks below have the combination of a favorable VGM score, a favorable Zacks Rank, a market cap below $2 billion and a projected long-term EPS growth of above 20%.
BG Staffing, Inc. (BGSF - Free Report) is a national provider of temporary staffing services across a diverse set of industries. Its present business segments offer temp services in the Multi-Family, Professional and Commercial sectors. The expected EPS growth rate over the next 5 years stands at 20%.
Forward P/E: 12.91
MiX Telematics Limited provides fleet and mobile asset management solutions. It offers vehicle tracking services for the consumer and commercial vehicle market worldwide. The expected EPS growth rate over the next 5 years stands at 22.5%.
Forward P/E = 18.47
Stamps.com Inc. provides easy, convenient and cost-effective Internet-based services for mailing or shipping letters, packages or parcels anywhere anytime in the U.S.The expected EPS growth rate over the next 5 years stands at 20%.
Forward P/E = 17.05
Vanguard Natural Resources, LLC is an independent natural gas and oil company, focused on the acquisition, exploitation and development of natural gas and oil properties. The expected EPS growth rate over the next 5 years stands at 22.7%.
Forward P/E = 3.17
Air France-KLM SA (AFLYY - Free Report) is an airline company. The company's core business is passenger transport, cargo transport, and aircraft maintenance services. The expected EPS growth rate over the next 5 years stands at 28.8%.
Forward P/E = 3.53
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Small Caps Yet to Hit Highs: 5 Stocks to Buy Right Now
The recent rebound in oil prices, improvement in job numbers and favorable manufacturing data have all infused some optimism in the market. Investor confidence was further bolstered with the International Monetary Fund affirming “negligible” impact of Brexit on U.S. markets and the positive influence of the overwhelming victory of Japan’s Prime Minister Shinzo Abe. Additionally, the CBOE Volatility Index (VIX) has declined 3% year to date to nearly 13.5, reflecting low volatility in the U.S. markets.
While these factors have already propelled a number of large and mid-cap stocks to their all-time highs, the small-cap space is still largely untapped. This is because, investors resorted to safer bets first.
Small-cap stocks are considered inherently risky on account of low trading liquidity, limited access to capital, brief operational history and lack of publicly available information.
However, small cap stocks with good fundamentals have much higher growth potential than their large-cap counterparts. As an evidence, the Vanguard Small Cap ETF clocked a return of 7.75%, conveniently topping the S&P 500's 5.51% over the last 10 years.
Historically, small caps have outperformed in an expanding economy when the risk of recession is low. That is why many believe this is the right time to build positions in small-cap stocks instead of continuing to invest in the mid- and large-caps that have already appreciated to their highs.
Nonetheless, identifying the right small-cap stocks could be quite a challenge.
Here, we have handpicked 5 attractive small cap stocks that are yet to reach their highs with the help of our new style score system.The stocks below have the combination of a favorable VGM score, a favorable Zacks Rank, a market cap below $2 billion and a projected long-term EPS growth of above 20%.
BG Staffing, Inc. (BGSF - Free Report) is a national provider of temporary staffing services across a diverse set of industries. Its present business segments offer temp services in the Multi-Family, Professional and Commercial sectors. The expected EPS growth rate over the next 5 years stands at 20%.
Forward P/E: 12.91
MiX Telematics Limited provides fleet and mobile asset management solutions. It offers vehicle tracking services for the consumer and commercial vehicle market worldwide. The expected EPS growth rate over the next 5 years stands at 22.5%.
Forward P/E = 18.47
Stamps.com Inc. provides easy, convenient and cost-effective Internet-based services for mailing or shipping letters, packages or parcels anywhere anytime in the U.S.The expected EPS growth rate over the next 5 years stands at 20%.
Forward P/E = 17.05
Vanguard Natural Resources, LLC is an independent natural gas and oil company, focused on the acquisition, exploitation and development of natural gas and oil properties. The expected EPS growth rate over the next 5 years stands at 22.7%.
Forward P/E = 3.17
Air France-KLM SA (AFLYY - Free Report) is an airline company. The company's core business is passenger transport, cargo transport, and aircraft maintenance services. The expected EPS growth rate over the next 5 years stands at 28.8%.
Forward P/E = 3.53
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>