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The Zacks Analyst Blog Highlights Universal Technical Institute, Diversified Energy, Regional Management, Yext and Interface

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For Immediate Release

Chicago, IL – April 12, 2024 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Universal Technical Institute Inc. (UTI - Free Report) , Diversified Energy Co. PLC (DEC - Free Report) , Regional Management Corp. (RM - Free Report) , Yext Inc. (YEXT - Free Report) and Interface Inc. (TILE - Free Report) .

Here are highlights from Thursday’s Analyst Blog:

Can Small-Cap Stocks Renew Their Momentum in 2024?

U.S. small businesses are still suffering from high inflation and interest rates. The NFIB (National Federation of Independent Business) Small Business Optimism Index decreased marginally in February to 89.4 from 89.9 in January, marking the 26th consecutive month below the 50-year average of 98.

On the other hand, a survey by Goldman Sachs 10,000 Small Business Voices — a policy advocate for small business owners — revealed a relatively rosy picture. According to the survey, which was conducted in January, 75% of small business owners are optimistic about their financial well-being in 2024, up from 68% a year earlier.

The survey also showed that 28% of small business owners rated the economy as good or excellent, up 9% from a quarter ago. More than half of the respondents said they expect to create jobs this year, and 62% expect their profits to grow in 2024.

Meanwhile, on Feb 22, the CNBC|SurveyMonkey reported that the Small Business Confidence Index reached 47% in first-quarter 2024, marking its highest level since President Joe Biden took office.

The survey, which was conducted online between Jan 22 to Feb 1, revealed that 28% of small business owners describe the current state of the economy as "excellent" or "good," up 25% sequentially and higher than 18% in the first quarter of 2023.

Robust U.S. Economy

Despite facing a 22-year high interest rate and elevated inflation, the fundamentals of the U.S. economy remain rock solid. The U.S. economy added 303,000 nonfarm jobs in March, well above the consensus estimate of 195,000.

The unemployment rate in March was 3.8% compared with 3.9% in February. Personal consumption expenditure — the largest driver of GDP — rose 0.8% month over month in February, compared with a 0.2% rise in January.

U.S. GDP rose 2.5% in 2023 compared with 1.9% in 2022. At the beginning of 2023, the consensus estimate for full-year GDP was 2%. On Apr 4, the Atlanta Fed GDPNow tracker forecast a 2.5% growth rate for first-quarter 2024, indicating no chance of a near-term recession.

Peak Inflation Behind Us

Peak inflation is far behind us as the current inflation level is around 1/3rd of what it was in June 2022. The CME FedWatch currently shows a 51.3% probability of the first cut of the existing Fed funds rate in the June FOMC meeting.

On Apr 3, in a speech at Stanford University, Fed Chairman Jerome Powell reiterated that the central bank will start reducing the Fed fund rate at some point of time this year. However, he also cautioned that the time of the rate cut will depend on upcoming economic data, especially the inflation data.

Small Caps Likely to Regain Pace

Small-cap companies have suffered from record-high inflation, a soaring interest rate and fear of an impending recession. Further, small businesses are predominantly dependent on the domestic economy. They generally have very little access to export markets. Better-than-expected consumer spending has reduced the risk of a near-term recession.

Sam Gutierrez, senior research scientist at SurveyMonkey, said "We're kind of seeing a potential turn around the corner in terms of small business optimism." The small-cap-centric benchmark — Russell 2000 — is up 3.4% year to date.

How to Select Stocks

We have selected small-cap (market capital < $1 billion) companies that have strong potential for 2024. Within these stocks, we have picked those that have seen positive earnings estimate revisions in the last 60 days. Finally, 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.

Five such small-cap stocks are - Universal Technical Institute Inc., Diversified Energy Co. PLC, Regional Management Corp., Yext Inc. and Interface Inc..

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit for information about the performance numbers displayed in this press release.

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