In November 2024, small-cap stocks, reflected in the Russell 2000 index, experienced a notable surge, reaching a new 52-week peak. This growth has positioned the index favorably against larger indices like the Nasdaq 100 and sectors such as healthcare. The upward trajectory suggests that investors may be entering a speculative phase of the investment cycle, favoring smaller, growth-oriented stocks. This trend indicates a shift in market dynamics where smaller capitalized companies, often seen as having higher growth potential, are in vogue among traders. The active trading in these stocks during a low-volume session highlights their appeal, as investors are keen on capitalizing on potential gains.
Among the small-cap stocks garnering attention are four notable companies, each exhibiting unique performance metrics. Marathon Digital Holdings, which specializes in cryptocurrency mining, recently broke past the $30 mark, reflecting a significant move above prior resistance levels. Despite facing substantial earnings per share (EPS) declines this year, Marathon has shown impressive growth over a five-year span, leading to a market capitalization of approximately $8.99 billion, alongside a very manageable debt-to-equity ratio of 0.2.
Kohl’s, the retail chain, has had a tumultuous year, witnessing a staggering drop in its stock price from $27 in May to around $14.97 currently, representing a notable loss of 44%. Kohl’s financial health appears compromised, as indicated by a 54% drop in earnings this year and a 10% decline over the past five years, compounded by a high debt-to-equity ratio of 2. However, it’s worth noting that the stock offers an attractive estimated dividend yield of 13.56%, potentially offsetting some investment concerns.
Another noteworthy player is Hims & Hers Health, a company offering personal care products that has witnessed a remarkable climb in stock price from just above $11 in May to a new high of $35 in November. The company’s financial performance has been stellar, showing an impressive 824% increase in earnings this year, although its brief corporate history means there is no five-year EPS record. With a healthy debt-to-equity ratio of 0.03 and a market cap of $7.48 billion, Hims is reflective of the broader trends driving interest in stocks perceived as growth-oriented.
Conversely, Wolfspeed, a semiconductor manufacturer, is on a steady downward trajectory, having hit a new low this month following a decline since June’s peak just under $31. The company’s financial performance has suffered, with a 38% drop in earnings this year and an 18% decline over the last five years. Wolfspeed’s high debt-to-equity ratio of 10 signifies financial risk, and it currently trades at about twice its book value, albeit without a price-earnings ratio due to negative earnings.
The iShares Russell 2000 ETF, a staple among investors seeking exposure to small-cap stocks, has also hit new highs, surpassing its post-election surge earlier in the month. This exchange-traded fund aims to provide a comprehensive overview of small-cap performance, aggregating 2,000 companies across various sectors, including financials, industrials, healthcare, information technology, and consumer discretionary. The continued rise of the ETF reflects the burgeoning interest in small-cap stocks, further showcasing a market environment conducive to such investment strategies. In summary, while some companies show remarkable rebounds, others face challenges, entrenching the diverse performance landscape of the small-cap segment.