While Jun 3 marked the S&P 500 index's best 50-day trading stretch, the day also witnessed good news on the small-business front. The Senate passed a bill to give small businesses more flexibility in how they spend federal loans given as part of a coronavirus aid program. This will definitely bring relief to many small players that have been hit hard by the coronavirus-related shutdown.
However, things have not been all that bleak for the small-business cohort. The small-cap specific Russell 2000 index has been performing strongly over the past couple of months.
Small-capitalization stocks have been driving markets lately, with many predicting this to be the beginning of the end of their years-long bear market. Here we have selected five small-cap stocks with a favorable Zacks Rank and strong growth potential in near future.
Senate Passes Bill to Help Small Businesses
The Senate passed a bill on Jun 3, giving small businesses up to 24 weeks to use Paycheck Protection Program loans created during the coronavirus pandemic, up from the current eight-week deadline. The program was created in March to support small businesses in this trying time and encourage them not to lay off employees.
Democratic Senator Ben Cardin said that gyms, caterers, museums and other small businesses had been particularly struggling with the eight-week requirement for using the loans. So, a broader time-frame was required to carry out the terms of the loans. This definitely will help small businesses breathe easy now.
Small caps in general have been the darlings of Wall Street lately. The Russell 2000 index gained 20.9% during April and May, it is largest two-month percentage gain since 2009 and the best two-month relative performance to the S&P 500 index since February 2019, according to Dow Jones Market Data.
Economy Reopening, Consumer Confidence Improves
Almost all 50 states across the United States have started easing restrictions and businesses have started reopening. This will allow restaurants, salons, spas and barbershops to serve customers in most states. Also, retail stores have started opening from this month. This is an indication that the market's worst is behind us as negative estimates are already factored in market valuation.
Also, owing to the nature of small businesses, which primarily have a domestic focus, they are largely dependent on the spending of U.S. consumers. Surprisingly, consumer confidence index rose to 86.6 this month from a downwardly revised 85.7 in April. So, it is likely that consumers will once again start spending after remaining locked in their homes for nearly two months.
We have narrowed down our search to five small-cap stocks that have gained more than 20% in the last one month with robust growth potential and impressive earning estimate revisions. Each of our stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Calix, Inc CALX is a global leader in access innovation. Its Unified Access portfolio of broadband communications access systems and software enables communications service providers worldwide to transform their networks and become the broadband provider of choice to their subscribers.
The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 22.2% over the past 60 days. The company’s shares have gained 20.7% in the past month.
ChannelAdvisor Corporation ECOM offers cloud-based e-commerce solutions and services. It solutions include marketplaces, comparison shopping, paid search, social campaigns, flex feeds, web stores and rich media.
ChannelAdvisorhas an expected earnings growth rate of 62.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 32.7% over the past 30 days. The company’s shares have increased 42.9% in the past month.
Tutor Perini Corporation TPC provides diversified general contracting, construction management and design-build services to private clients and public agencies worldwide.
The company has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 16.7% over the past 30 days. The company’s shares have increased 73.2% in the past month.
United Natural Foods, Inc. UNFI is the leading distributor of natural, organic and specialty food and non-food products in the United States and Canada. The company carries more than 110,000 high-quality natural, organic and specialty products, consisting of national, regional and private label brands in six product categories.
United Natural Foods has an expected earnings growth rate of 30.8% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 95.7% over the past 30 days. The company’s shares have increased 83.7% in the past month.
SpartanNash Company SPTN is a food distributor serving military commissaries and exchanges in the United States. The company's core businesses include distributing food to military commissaries and exchanges, and independent and corporate-owned retail stores located in 44 states and the District of Columbia, Europe, Cuba, Puerto Rico, the Azores, Bahrain and Egypt.
SpartanNashhas an expected earnings growth rate of 52.7% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 20.9% over the past 30 days. The company’s shares have increased 29.6% in the past month.
Issuer Direct Corporation ISDR operates under several brands in the market, including Elite Financial Press, My EDGAR, Bassett Press, Edgarization, The Edgar Service Bureau, iProxy Direct, Issuer Logistics, Comply, Shareholder Direct, and Audit Ready.
The company has an expected earnings growth rate of 9.1% for the current year. The Zacks Consensus Estimate for current-year earnings has improved by 2.1% over the past 30 days. The company’s shares have increased 22.7% in the past month.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>
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Calix, Inc (CALX) : Free Stock Analysis Report
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