The Russell 2000 is a stock market index comprised of 2,000 companies that have small market capitalizations. A small-cap stock is generally any security of a publicly traded company whose market value is between $250 million and $2 billion. The Russell 2000 is regarded as a bellwether of the U.S. economy as it includes a large number of smaller companies based throughout America.
While it has dominated periodically, the Russell 2000 has lagged the performance of other indices for a long-time. In the last five years, the Russell 2000 index has gained 37%. That is much less than the 85% gain in the benchmark S&P 500 index and a 114% increase in the technology-laden Nasdaq index over the same period of time. Despite the long-term underperformance, many analysts remain bullish on the Russell 2000 and believe that it’s only a matter of time before small-cap stocks overtake their large-cap peers.
Here is Wall Street favorites: three Russell 2000 stocks with strong buy ratings for May 2024.
GEO Group (GEO)
GEO Group (NYSE:GEO) is a company based in Florida that operates private prisons, detention centers, and mental health facilities not only in the U.S. but around the world — from Australia to England. The company is definitely a small-cap stock with a current market capitalization of less than $2 billion. However, it continues to win praise from analysts with a consensus strong buy rating on the stock.
The three analysts who rate GEO stock have a median price target on the shares of $17.67. That represents 32% upside from where the shares currently trade. The elevated price target comes despite a big run in GEO stock.
In the last 12 months, the company’s share price has gained nearly 60%, including a 24% increase this year. Interestingly, the GEO Group had been a long-term holding of investor Michael Burry of The Big Short fame, though he sold his stake in the company last year.
Celsius Holdings (CELH)
Few stocks, if any, have enjoyed as a big a run in recent years as Celsius Holdings (NASDAQ:CELH). The maker of energy drinks has seen its share price rise 6,355% in the last five years. CELH stock has more than doubled in the past 12 months, having increased 110%. Already in 2024, the share price is up 58%. Despite the meteoric growth, 11 analysts maintain a consensus rating of strong buy on the stock.
The median price target on CELH stock is currently $93.82, which is right around where the shares currently trade. However, there doesn’t appear to be any signs of a slowdown in momentum with the stock.
Analysts see continued upside in the fact that Celsius is able to claim that its drinks boost people’s metabolism and helps to burn body fat. This distinguishing characteristic is helping to drive sales and the share price at the company.
Viking Therapeutics (VKTX)
Analysts are having a difficult time keeping up with Viking Therapeutics (NASDAQ:VKTX). The biotechnology company, which is developing a promising weight loss drug, has seen its share price nearly quadruple (up 286%) year to date. The stock has been rising on expectations that the company’s weight loss drug will either win regulatory approval and come to market, or Viking Therapeutics will be acquired by a larger pharmaceutical company.
This win-win situation explains why nine analysts rate VKTX stock a strong buy. The median price target on the shares is $113.50, which is 60% above current levels. Early trial results of Viking Therapeutics injectable weight loss drug have been positive. When the company in March provided a glimpse of data from a recent study, it sent VKTX stock up 120% in one day. Analysts appear to see no downside here.
Either the company’s weight loss medication makes it to market or the company is bought at a rich valuation by a larger pharma company looking to compete in the sector.
On the date of publication, Joel Baglole 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.
