Seven small-cap two-baggers in the last year. Small-cap stocks — publicly traded companies ranging in value from $300 million to $2 billion — don’t get much attention. But that’s often precisely why huge winners can…
Seven small-cap two-baggers in the last year.
Small-cap stocks — publicly traded companies ranging in value from $300 million to $2 billion — don’t get much attention. But that’s often precisely why huge winners can be found among the small caps. The Russell 2000, a popular small-cap stock index, is up over 11 percent in the last year, which isn’t bad. But to be included on the following list of small-cap stocks, 11 percent won’t cut it. Each of the following companies has seen shares double — go up 100 percent — in the last 52 weeks alone. Here are seven of 2018’s best small-cap stocks.
BJ’s Restaurants operates a chain of casual dining restaurants under its umbrella, including BJ’s Restaurant & Brewhouse, BJ’s Pizza & Grill, and several others. With 201 locations in 27 states, it appears the market underestimated the popularity of BJRI’s signature pizza and handcrafted beer. Efforts like a new loyalty program and digital ordering have paid off, with comparable restaurant sales growing 4.2 percent in the first quarter and 5.6 percent in the second quarter. In 2017, comps grew just 1.6 percent. The recent growth has made BJRI one of the best small-cap stocks of 2018.
Both small caps, Crocs and BJ’s, have about the same valuation and revenue, of $1.5 billion and $1 billion, respectively. Crocs swept the nation shortly after its founding, experiencing explosive growth between 2002 and 2012 as the funky-looking, colorful, foamy footwear with holes in them became a quasi-fad. But the impressive growth disappeared after 2012, and coming into 2018, few investors thought CROX would be one of the year’s best small-cap stocks to buy. Cost-cutting measures, including shutting stores and costly manufacturing plants, combined with a focus on e-commerce may bring revenue growth for the first time since 2014.
Everyone knows that if you’re looking for small-cap stocks that can roar without a moment’s notice, biotech is the place to look. Stocks like ARWR don’t stand the test of fundamental valuation analysis. For example, Arrowhead Pharmaceuticals trades at 131 times sales and lost $54 million on $13.6 million in revenue over the last 12 months, but is just shy of a $2 billion valuation. ARWR soared this year primarily due to the increasing attractiveness of its pipeline, which has three phase I liver treatments. On Sept. 6, positive data for its RNAi Hepatitis B treatment sent shares up 38 percent.
UVE stock has long been one of the more attractive small-cap stocks to buy, and despite a meteoric rise in the last year, shares of the Fort Lauderdale, Florida-based property insurer remain cheap at 13 times earnings. Consistently profitable and expected to grow revenue by double-digits in 2018 and 2019, Universal Insurance Holdings is a well-run, profitable business in a sleepy industry with just one or two Wall Street analysts covering the stock. Essentially, investors have been forced to pay attention to UVE as the company has posted an absolutely remarkable streak of earnings beats, exceeding profit expectations in 14 consecutive quarters.
Boot Barn doesn’t only sell its namesake footwear — it operates a chain of western apparel stores, also selling work footwear. It operates 208 stores in 29 states as well as two e-commerce sites. BOOT shares plunged between 2015 and 2017 as a secular decline in brick-and-mortar retailers hit the stock, and the company’s prosperity, squarely. That gave the stock ample chance to rally from lows a year ago to 2018’s highs as growth picked up. Last quarter, revenue grew 16.2 percent and same-store sales grew 11.6 percent, with earnings roughly twice as high as it previously guided.
Another one of 2018’s best small-cap stocks has turned out to be Fossil Group, the luxury watchmaker that also seemed an unlikely bullish pick at the dawn of the year. Even though sales are expected to fall in both 2018 and 2019, all that’s done is set the stage for FOSL to beat a very low bar, which seems to be recurring theme among the best small-cap stocks. After two straight years of horrible losses, including about 30 percent in 2016 and 70 percent in 2017, FOSL has now posted four consecutive earnings beats.
Unisys rounds out this list of 2018’s best small-cap stocks. With roots in the 1800s, Unisys has always been techno-centric, beginning with typewriters, adding machines and navigational equipment. UIS has more modern ambitions today, offering data center, infrastructure management and cloud computing services. In February, Unisys announced a monstrous fourth-quarter earnings beat, laying foundation for a turnaround. Having nearly tripled from its 52-week low of $7.20, around $20 shares are still well below their $35 2014 high. On Sept. 4, UIS was added to one of the most prestigious small-cap stock indexes, the S&P SmallCap 600 index, helping fuel 2018’s rally.