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Why Small-Cap ETFs & Stocks Outperformed Last Week

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U.S. stocks performed well last week on optimism over a potential coronavirus vaccine and the reopening of the economy, though rising tensions between the United States and China weighed on the market. All the 50 states have lifted restrictions put in place to combat the coronavirus outbreak. The easing has started to propel demand and is likely to revive economic growth (read: Is Moderna Winning the COVID-19 Vaccine Race? ETFs to Gain).

The latest data for U.S. consumer sentiment shows that the University of Michigan’s consumer sentiment index rose to 73.7 in early May from 71.8 in April as fiscal stimulus measures “improved consumers’ finances and widespread price discounting boosted their buying attitudes.”

Additionally, Federal Reserve Chairman Jerome Powell said the central bank still has plenty of ammunition to rescue the economy from a deep slowdown, indicating a potential recovery in the second half of the year. The Fed would expand existing lending programs or start new ones if required. Since mid-March, the Fed has slashed interest rates to near zero and unveiled nine emergency lending programs, supporting corporate and municipal bond markets.

Given the improvements in domestic economy, small-cap stocks led the way higher last week. Notably, the Russell 2000 outperformed, climbing 7%, marking the best week since Apr 9. In comparison, the Dow gained 3.3%, the S&P 500 advanced 3.2% and the Nasdaq Composite rose 3.4%.

Against such a backdrop, we highlight five small-cap ETFs and stocks that crushed the market last week. These could be excellent plays for investors should the same trends prevail.

Top ETFs

Invesco S&P SmallCap Energy ETF (PSCE - Free Report) – Up 12.1%


This fund provides exposure to the U.S. small-cap segment of the energy sector by tracking the S&P Small Cap 600 Capped Energy Index. It holds 42 stocks in its basket with AUM of $12.9 million. Energy equipment & services accounts for half of the portfolio, while oil, gas & consumable fuels takes the remaining portion. The fund trades in average daily volume of 82,000 shares and charges 29 bps in fees per year. It has a Zacks ETF Rank #5 (Strong Sell) with a High risk outlook (read: Oil's Best Streak for First Time Since July: ETF & Stock Winners).

First Trust Small Cap Value AlphaDEX Fund (FYT - Free Report) – Up 11.5%

This fund provides exposure to small-cap value stocks using the AlphaDEX methodology. It has 263 stocks in its basket, with key holdings consumer discretionary and industrials taking 20% and 19%, respectively. FYT has a lower level of AUM at $41.9 million and charges 72 bps in fees per year. It trades in average daily volume of 19,000 shares and has a Zacks ETF Rank #3 (Hold) with a High risk outlook.

Legg Mason Small-Cap Quality Value ETF (SQLV - Free Report) – Up 11.1%

This ETF offers exposure to high quality, U.S.-traded small-cap stocks with relatively low valuations by tracking the Royce Small-Cap Quality Value Index. It holds 247 stocks in its basket with key holdings in financials, industrials, health care, information technology and consumer discretionary. The product has gathered $10.4 million in its asset base while trades in volume of 2,000 shares a day on average. It charges 62 bps in annual fees.  

Invesco S&P SmallCap Industrials ETF (PSCI - Free Report) – Up 10.9%

This product follows the S&P SmallCap 600 Capped Industrials Index, which measures the performance of companies engaged in the business of providing industrial products and services, including engineering, heavy machinery, construction, electrical equipment, aerospace and defense, and general manufacturing. The product has a basket of 94 securities and expense ratio of 0.29%. It has AUM of $34.7 million while trading in lower volume of 6,000 shares. PSCI has a Zacks ETF Rank #3 with a High risk outlook (read: Small-Cap Earnings Picture: 5 Sector ETF Stars).

Invesco S&P SmallCap Materials ETF (PSCM - Free Report) – Up 10.6%

This fund offers exposure to companies that are principally engaged in producing raw materials, including paper or wood products, chemicals, construction materials, and mining and metals. It follows the S&P SmallCap 600 Capped Materials Index, holding 36 securities in its basket. From an industrial look, chemicals takes the largest share at 58.9% followed by metals & mining (23%) and paper & forest products (15.5%). The fund has AUM of $8.9 million and trades in volume of 2,000 shares a day on average. It charges 29 bps in annual fees and has a Zacks ETF Rank #4 (Sell) with a High risk outlook.

Top Stocks

Navidea Biopharmaceuticals Inc. (NAVB - Free Report) – Up 152.8%


This biopharmaceutical company is focused on the development and commercialization of precision diagnostics and radiopharmaceutical agents for diseases such as cancer and Alzheimer. The stock has seen positive earnings estimate revision of 11 cents for this year over the past 30 days with an estimated earnings growth of 56.58%. The company has a market cap of $52.6 million. It has a Zacks Rank #3 and a VGM Score of D.

CV Sciences Inc. (CVSI - Free Report) – Up 151.7%

It operates as a life science company whose operating segment consists of specialty pharmaceuticals and consumer products. The company saw negative earnings estimate revision of 4 cents for this year and has an estimated earnings growth of 41.18%. CV Sciences has $93.9 million market cap. It has a Zacks Rank #3 and VGM Score of C.

Renren Inc. – Up 137.8%

This $96.5 million company operates as a social networking Internet platform in China offering information and content sharing, music, online games and online shopping and other services including communication. The company has a Zacks Rank #3 and VGM Score of D (read: Hot ETFs to Tap Consumers' Digital Shift Amid Coronavirus).

Celsion Corporation (CLSN - Free Report) – Up 122.8%

This integrated development clinical stage oncology drug company is focused on the development and commercialization of directed chemotherapies, DNA-mediated immunotherapy, and RNA-based therapies for the treatment of cancer. The stock witnessed no earnings estimate revision activity for this year over the past month and has an estimated earnings growth of 38.46%. The company has $88.6 million in market cap. It has a Zacks Rank #2 (Buy) and VGM Score of F. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Oasis Midstream Partners LP (OMP - Free Report) – Up 115%

With a market cap of $319.2 million, this master limited partnership company owns, develops, operates and acquires a diversified portfolio of midstream assets primarily in North America. The stock saw no earnings estimate revision activity for this year over the past month and has an estimated earnings decline rate of 1.2%. It has a Zacks Rank #3 and VGM Score of A.

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