The latest U.S. stock market rally seems to be spreading across all market capitalizations with small-cap stocks taking the center stage this week. This is especially true as the Russell 2000 Index hit new 52-week high, having gained about 20% so far this year. However, the benchmark is still lagging its large-cap brethren and below nearly 7% from its all-time high set on Aug 31, 2018 (read: Stocks Set for a Strong 2020? Top-Ranked ETFs to Pick).
Most of the rally was driven by its attractive valuation, which has provided investors a nice opportunity to snap them at a relatively lower price versus large-cap cousins in a skyrocketing market. Then, easing monetary policy has been the biggest catalyst. The central bank has slashed interest rates two times this year to sustain the decade-long economic expansion. Lower interest rates bode well for the pint-sized stocks, perking up economic activities and resulting in higher spending, thus boosting domestically focused companies.
Further, the latest bouts of data, which indicates renewed economic growth, are adding to the strength.
Given this, iShares Russell 2000 ETF (IWM - Free Report) tracking the Russell 2000 Index has rallied about 22% so far this year to hit a new one-year high. Let’s take a closer look at the fundamentals of IWM and its performance (see: all the Small Cap ETFs here).
IWM in Focus
This is one of the largest and the most-popular ETFs in the small-cap space with AUM of $45.5 billion and average daily volume of 19.2 million shares. Holding 1984 stocks, the fund is widely spread across components, with each holding less than 0.4% share. Financials (17.8%), healthcare (17.5%) industrials (16.1%), information technology (13.7%) and consumer discretionary (11.0%) are the top five sectors. IWM charges 19 bps in annual fees and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.
Though most stocks in the fund’s portfolio are moving north this year, we have highlighted the five best-performing stocks in the ETF that have led the way higher:
EverQuote Inc. (EVER - Free Report) : The stock has surged about 700% so far this year. It carries a Zacks Rank #1 (Strong Buy) and has a VGM Score of D. The Zacks Consensus Estimate for this year has been revised up from a loss of 46 cents to a loss of 29 cents in the past three months. This represents 88.9% year-over-year growth. You can see the complete list of today’s Zacks #1 Rank stocks here.
ConforMIS Inc. (CFMS - Free Report) : This stock has climbed nearly 414% in the same time frame. The stock saw negative earnings estimate revision of 5 cents for this year over the past three months and has an estimated year-over-year earnings growth rate of 37.8%. ConforMIS has a Zacks Rank #4 (Sell) and VGM Score of C.
Digital Turbine Inc. (APPS - Free Report) : This stock has risen more than 341% and witnessed positive earnings estimate revision of a penny for the fiscal year (ending March 2020) over the past three months. Its earnings are expected to grow a whopping 162.5%. Digital Turbine has a Zacks Rank #3 (Hold) and VGM Score of C.
Achillion Pharmaceuticals Inc. : The stock has jumped roughly 290% so far this year. It has seen no earnings estimate revision for this year over the past three months and has an expected earnings decline rate of 15.7%. The company has a Zacks Rank #3 and VGM Score of F (read: Healthcare Sector Outperforming: 5 Best ETFs & Stocks QTD).
Kodiak Sciences Inc. (KOD - Free Report) : The stock has rallied more than 271% so far this year. The Zacks Consensus Estimate for this year has been revised up from a loss of $1.55 to a loss of $1.23 in the past three months. It represents 48.7% year-over-year growth. Kodiak Sciences currently has a Zacks Rank #3 and VGM Score of C.
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