Volatility is rising on Wall Street, with many investors worried that the index could drop double digits or even crash in the coming weeks. A sharp decline in stock prices can definitely disrupt a portfolio, but smart investors can see such a decline as an opportunity to acquire high-quality assets, including small-cap stocks, at attractive valuations. I recognize that it is.
Please enter your company in russell 2000 This index includes 2,000 small-cap stocks within the U.S. stock market. Analysts note that small-cap stocks have higher growth potential compared to established large-cap stocks. Second, they tend to be less correlated with large-cap stocks, which provides diversification benefits. Additionally, smaller companies are often under-researched by analysts, giving investors an opportunity to discover hidden gems. So in this article, we’ll take a deep dive into three Russell 2000 stocks that demonstrate strong fundamentals and the ability to weather turbulent market conditions.
Atkore (ATKR)
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Top of the list of Russell 2000 stocks to buy: Atokore (New York Stock Exchange:ATKR) provides electrical, safety and infrastructure solutions. The company has a strong presence in the electrical and cable management market. In recent years, Atkore has made strategic acquisitions in the United States and abroad to help drive growth and increase market share.
In February, Atkore announced mixed results for the first quarter of 2024. Net revenue decreased 4.2% year-on-year, but due to lower average selling prices, he made $798.5 million. Still, it exceeded market expectations. Net income decreased significantly by more than 20%, primarily due to lower gross profit and higher costs. Adjusted net income per share (EPS) Reflecting this decline, net income decreased 10.6% to $4.12.
Despite these challenges, Atcore management has raised its fiscal 2024 adjusted EPS guidance to a range of $16.50 to $17.50. The Board of Directors also announced the company’s first quarterly dividend, a significant milestone for the company.
So far this year, ATKR stock is up 15%. The stock is attractively priced at 10.6 times expected earnings and 2.03 times sales. Meanwhile, analysts have a 12-month price target for ATKR of $200, suggesting a potential upside of nearly 10% from current levels.
Matador Resources (MTDR)
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independent energy company Matador Resources (New York Stock Exchange:MTDR) is the next Russell 2000 stock to buy. The company has carved out a niche market in the shale oil field. Management is prioritizing unconventional plays, particularly the fluid-rich portions of the Wolfcamp and Bone Spring formations in the Delaware Basin.
Matador Resources announced strong first quarter 2024 results in April. Total revenue reached $787.7 million, an increase of 40.5% year over year. Adjusted net income also increased, increasing 14.6% to $206.2 million. Adjusted earnings increased 15% year over year to $1.71 per diluted share.
One of the reasons behind the strong indicators was Matador’s higher total production and higher realized price of crude oil. The company averaged more than 149,700 barrels of oil equivalent (BOE) per day during the quarter. Management reiterated its bullish production outlook for 2024, predicting an average daily total of 153,000 to 159,000 BOE. Meanwhile, analysts say Matador has been able to maintain a low-cost structure while maximizing production efficiency.
MTDR stock has risen 15% since the beginning of the year, but it still appears to be undervalued within the energy sector. The stock is currently trading at a forward P/E ratio of 8.1 times, but the energy sector’s stock price is well above 10 times. Despite the recent rally, Wall Street remains bullish, with a median 12-month price target of $77, or a 16% upside potential.
iShares Russell 2000 ETF (IWM)
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To conclude our discussion of Russell 2000 stocks, iShares Russell 2000 ETF (NYSEARCA:I.W.M.). This fund tracks the investment results of the Russell 2000 Index and provides a convenient way to gain exposure to small-cap stocks in the United States.
Founded in May 2000, IWM has approximately $59 billion in assets. The fund’s major sectors include Industrials (17.6%), Financials (16%), Information Technology (14.8%), Healthcare (14.8%), and Consumer Discretionary (10.5%). Among the top holdings are super microcomputer (NASDAQ:SMCI), micro strategy (NASDAQ:MSTR), Comfort Systems USA (New York Stock Exchange:repair), e.lf beauty (New York Stock Exchange:fairy) and to innovation (New York Stock Exchange:ont), accounting for over 3.7% of the fund’s roster.
IWM has remained flat since the beginning of the year. On the other hand, the current valuation is favorable, with price-to-earnings (P/E) and price-to-book ratio (P/B) of 15.54x and 1.9x, respectively. Interested investors should also note that his current dividend yield is 1.3% and his annual expense ratio is 0.19%.
On the date of publication, Tezcan Gecgil did not have (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer and are influenced by InvestorPlace.com. Publishing guidelines.
