8 Russell 2000 Stocks Set to Benefit From Small-Cap Outperformance

Investors are turning away from large-cap tech stocks in favor of value stocks.
The Russell 2000 stands out as one of the biggest winners of 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, doing much better than the , which is up 1.7%, and the Nasdaq, which is roughly flat.

The Dow’s strong performance comes mainly from investors moving money out of technology stocks and into more stable, value-focused companies.

That shift has helped small-cap stocks even more. The US Small Cap 2000, which tracks smaller US companies, closed at 2,688.58 and is up 8.3% so far this year.

Small-cap stocks have actually been beating large-cap stocks for a while. Over the past six months, the has been up 21%, compared with 13% for the Dow Jones and about 8% for both the S&P 500 and the Nasdaq.

Many analysts think this trend will pick up speed this year as the bull market spreads beyond AI-driven stocks and valuations for smaller companies look more reasonable.

On top of that, professionals expect earnings at small companies to grow faster than those of large companies.

Searching for the Best Stocks in the Russell 2000

That gives investors good reason to believe the Russell 2000 could keep outperforming. With that in mind, we used the Investing.com screener to look for the most promising stocks within the index.

Specifically, we focused on companies that met the following criteria:

Russell 2000 member stocks
Market capitalization of less than $500 million
Upside potential of more than 30% according to the average analyst target
Upside potential of more than 30% 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 all free of charge, some of the criteria used here are reserved for InvestingPro and Pro+ subscribers.

This research enabled us to identify eight opportunities:

In simple terms, these Russell 2000 stocks look cheap. According to InvestingPro’s Fair Value estimates, they are undervalued by between 34.1% and 54.7%. Analysts also see strong upside, with price targets ranging from 35.7% to as much as 311.2%.

It is also worth noting that there are many other ways to find attractive stocks right now. Prebuilt searches let investors screen for stocks with just one click, based on themes like value, growth, quality, or defensive strategies. This makes it easier for investors with different goals to find stocks that match their approach.

Please note: Some searches are reserved for InvestingPro subscribers with a PRO+ plan.

 

Disclaimer: This article is written for informational purposes only. It is not intended to encourage the purchase of assets in any way, nor does it constitute a solicitation, offer, recommendation or suggestion to invest. I would like to remind you that all assets are evaluated from multiple perspectives and are highly risky, so any investment decision and the associated risk belong to the investor. We also do not provide any investment advisory services.