Investors are turning away from large-cap technology stocks in favor of value stocks. The Russell 2000 stands out as one of the biggest winners in this rotation. Which Russell 2000 stocks should you be watching right now?
The reached a new record high on Monday, closing at 50,135.87. It is now up 4.3% for the year, much better than the , up 1.7%, and the Nasdaq, which is roughly flat.
The Dow’s strong performance comes primarily from investors moving their money out of tech stocks and into more stable, value-oriented companies.
This change helped small-cap stocks even more. The US Small Cap 2000 Index, which tracks smaller US companies, closed at 2,688.58 and is up 8.3% year to date.
In fact, small-cap stocks have been beating large-cap stocks for some time. Over the past six months, the index is up 21%, compared to 13% for the Dow and about 8% for the S&P 500 and Nasdaq.
Many analysts believe this trend will accelerate this year, as the bull market expands beyond AI-based stocks and valuations of smaller companies look more reasonable.
Additionally, professionals expect small business profits to grow faster than large companies.
Finding the Best Russell 2000 Stocks
This gives investors good reason to believe that the Russell 2000 index could continue to outperform. With that in mind, we used Investing.com’s screening tool to find the most promising stocks in the index.
Specifically, we focused on companies that met the following criteria:
Russell 2000 member stocks Market cap less than $500 million More than 30% upside potential according to average analyst target More than 30% upside potential according to InvestingPro Fair Value InvestingPro Health Score greater than 2.5/5
Note: Although the basic functions of the Investing.com screener are available to everyone free of charge, some of the criteria used here are reserved for InvestingPro and Pro+ subscribers.
This research allowed us to identify eight opportunities:
Simply put, these Russell 2000 stocks look cheap. According to…
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