The Russell 2000, an index tracking the performance of small-to-mid-cap companies, continues to struggle against its peer indices, largely repeating the events of last year. In 2023, The Russell 2000 increased 16.8%, while the S&P 500 and Nasdaq indices appreciated 24.2% and 43.4%, respectively. The index had been trailing the S&P 500 and Nasdaq since then. In 2024, the Russell 2000 is up slightly more than 2%, while the S&P500 and Nasdaq are trading upward at 9.1% and 6.9%, respectively.
Because of the Russell 2000’s lackluster performance, there are some stocks, trading at low multiples and operating in interesting markets, worth looking into. Below are three names.
ACM Research (ACMR)
ACM Research (NASDAQ:ACMR) is a semiconductor equipment manufacturer. In particular, ACM Research supplies semiconductor manufacturers with wet processing equipment and technologies, and the manufacturer has a particular focus on China’s domestic semiconductor market.
ACM Research’s earnings results throughout 2023 were admittedly impressive and beat Wall Street’s estimates. Its recent earnings report was no different. Full-year revenue climbed 43% year-over-year to $558 million. ACM Research expects solid double-digit revenue growth in 2024 as well. During this period, the company expects its Shanghai-based unit to grow substantially.
Furthermore, while markets have slumped over the past week, ACMR shares continue to trend upward. Currently, the stock is up nearly 64% for the year. The company’s share price is also trading at relatively cheap valuation multiples. ACMR’s forward EV/EBITDA is around 14.7x, and its forward price-to-earnings ratio is 21.9x. ACM Research is cheap when compared to other semiconductor stocks out there, and the company’s growth prospects could help it rally even further.
Q2 Holdings (QTWO)
Q2 Holdings (NYSE:QTWO) is the only fintech company to make this list. In particular, Q2 provides a number of digital banking solutions to community and regional banks in order for them to better serve their customer base. For over a decade since the company went public, Q2 has delivered double-digit revenue growth on a year-over-year (YOY) basis, and the company has also improved net margins in the past couple of years.
The fintech company’s fourth-quarter results came in line with Wall Street estimates. Revenue for the quarter came in at $162.1 million, growing by more than 11% year over year, while full-year revenue was around $624.6 million, growing by just over 10% on a year-over-year basis. Wall Street analysts seem pretty happy with the stock as well. Several Wall Street firms, including Baird, RBC, and DA Davidson, have increased their price target for QTWO. Couple this with the fact many analysts expect Q2 to break even in the coming quarters and the fintech company’s shares seem like a decent buy.
Dorian LPG (LPG)
Dorian LPG (NYSE:LPG) transports liquefied petroleum gas (LPG) through its LPG tankers worldwide. As of February 2024, the company owns and operates a fleet of 25 very large gas carriers (VLGCs). The current machinations of commodities markets had helped Dorian LPG’s shares skyrocket to new heights in late 2023. In their Q2 earnings print, for example, the company highlighted higher propane and butane prices in Northwest Europe and Northeast Asia. They also noted U.S. exports of LPG improved sequentially. In the company’s Q3 earnings print, released in February, the company delivered stellar financial results across the board. Revenue increased 58% YOY to $163.1 million, while net income nearly doubled on a year-over-year basis to $99.9 million.
The company’s shares have underperformed the market in 2024, falling around 6% on a year-to-date basis, but Dorian’s valuation is quite cheap, trading at 6.7x forward earnings. Moreover, the shipping company’s prospects remain positive as shipping rates will likely remain elevated for some time.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
