After closing out 2023 with a 15.1% gain, the Russell 2000 looks even better this year in the new year. In fact, since Jan. 2, the index is up about 4% year to date, and could push even higher, taking some of the most undervalued Russell 2000 stocks along for the ride.
According to Goldman Sachs, the Russell 2000 Index could return about 9% in the first six months of the year, and about 15% in the next 12 months. All thanks to low valuations, and an improving economic outlook. As noted by Investing.com, “The strategists highlight that small-caps are currently trading at low valuations relative to historical levels, as indicated by the Russell 2000 price-to-book multiple. The primary driver of small-cap returns is expected to be US economic growth.”
That being said, let’s take a look back at some of the most undervalued Russell 2000 stocks to buy and hold for March 2024.
All of which should benefit from higher highs in the index.
Arrowhead Pharmaceuticals (ARWR)
The last time I mentioned Arrowhead Pharmaceuticals (NASDAQ:ARWR), I noted that, “While it recently fell after earnings fell short of expectations, keep an eye on the stock. The company is working with an RNAi mechanism to develop treatments for rare and, or not easily controlled diseases that have resisted treatment.” That was on Feb. 26, as ARWR traded at $28.53.
Today, the stock is up to $33.45 and could push even higher. For one, there’s speculation, ARWR could be a potential acquisition target. Two, at the moment, the company is developing about 14 different investigational medicines for ailments such as cardiovascular disease, idiopathic pulmonary fibrosis, and Hepatitis B, for example.
But what makes things even more exciting for Arrowhead, one of the most undervalued Russell 2000 stocks, is that, according to Acumen Research and Consulting, the global drug development market could be worth $181.4 billion by 2032. That could be significant for this undervalued $4.14 billion stock moving forward.
Murphy Oil (MUR)
I also mentioned Murphy Oil (NYSE:MUR) at the time, noting, “While we wait for MUR to recover, we can collect its 3.04% yield. It just declared a quarterly cash dividend of 30 cents a share, or $1.20 annualized. That’s payable on March 4 to shareholders of record as of Feb. 20.”
That was also on Feb. 26, as Murphy traded at around $39. Today, it’s up to $41.12, and it’s still undervalued. But I see it pushing aggressively higher. From its current price, I’d like to see the stock rally back to $44 initially. Then, if it can break above resistance there, it could go to $48.
According to President and CEO, Roger Jenkins, the company had a successful year of production and execution, generating ample free cash flow, and returning about $150 million to shareholders through buybacks and retired $500 million of debt.
And, at the moment, the company still has about $450 million remaining under its share buyback plan. Jenkins added that, “Our ongoing financial stewardship has given us momentum going into 2024, beginning with an increase to our longstanding dividend and restoring it to its 2016 level.”
Duolingo Inc. (DUOL)
The most explosive pick from Feb. 26 was Duolingo (NASDAQ:DUOL). And I still believe it could push even higher.
At the time, it traded around $177, and I noted, “After rallying from a 2023 low of $69 to a high of $245, Duolingo (NASDAQ:DUOL) just pulled back to its 200-day moving average at $177.03. Technically, the mobile learning stock is oversold on RSI, MACD, and Williams’ %R. But I don’t expect that to last long. I’d like to see it rally back to $245 near term.”
Following that note, DUOL hit a high of $241.86, and pulled back to $213.53. And I still believe it could push even higher. Helping, DUOL just blew earnings and guidance out of the water. For its fourth quarter, the company posted EPS of 26 cents, which beat estimates by 10 cents. Revenue–up 45.4% year over year–also beat estimates by $2.62 million.
Better, daily active subscriptions for the learning app soared to 26.9 million, an increase of about 65% quarter over quarter. Monthly active users came in at 88.4 million, an increase of 46% year over year. With growth showing no signs of slowing, DUOL could see higher highs.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
