Not all profitable companies are built to last - some rely on outdated models or unsustainable advantages.
Just because a business is in the green today doesn’t mean it will thrive tomorrow.
Wall Street is overwhelmingly bullish on the stocks in this article, with price targets suggesting significant upside potential.
However, it’s worth remembering that analysts rarely issue sell ratings, partly because their firms often seek other business from the same companies they cover.
Value investing has created more billionaires than any other strategy, like Warren Buffett, who built his fortune by purchasing wonderful businesses at reasonable prices.
But these hidden gems are few and far between - many stocks that appear cheap often stay that way because they face structural issues.
The Russell 2000 (^RUT) is home to many small-cap stocks, offering investors the chance to uncover hidden gems before the broader market catches on.
However, these companies often come with higher volatility and risk, as their smaller size makes them more vulnerable to economic downturns.
Mid-cap stocks have the best odds of scaling into $100 billion corporations thanks to their tested business models and large addressable markets.
But the many opportunities in front of them attract significant competition, spanning from industry behemoths with seemingly infinite resources to small, nimble players with chips on their shoulders.
The $10-50 price range often includes mid-sized businesses with proven track records and plenty of growth runway ahead.
They also usually carry less risk than penny stocks, though they’re not immune to volatility as many lack the scale advantages of their larger peers.
Value stocks typically trade at discounts to the broader market, offering patient investors the opportunity to buy businesses when they’re out of favor.
The key risk, however, is that these stocks are usually cheap for a reason – five cents for a piece of fruit may seem like a great deal until you find out it’s rotten.
The S&P 500 (^GSPC) is often seen as a benchmark for strong businesses, but that doesn’t mean every stock is worth owning.
Some companies face significant challenges, whether it’s stagnating growth, heavy debt, or disruptive new competitors.
Growth is a hallmark of all great companies, but the laws of gravity eventually take hold.
Those who rode the COVID boom and ensuing tech selloff in 2022 will surely remember that the market’s punishment can be swift and severe when trajectories fall.
Leading analysts are beaming with optimism on NVIDIA Corp. (NASDAQ: NVDA) and the broader AI trade, following the company's strong third-quarter performance on Wednesday.
Wall Street is overwhelmingly bullish on the stocks in this article, with price targets suggesting significant upside potential.
However, it’s worth remembering that analysts rarely issue sell ratings, partly because their firms often seek other business from the same companies they cover.
Growth boosts valuation multiples, but it doesn’t always last forever.
Companies that cannot maintain it are often penalized with large declines in market value, a lesson ingrained in investors who lost money in tech stocks during 2022.
Many small-cap stocks have limited Wall Street coverage, giving savvy investors the chance to act before everyone else catches on.
But the flip side is that these businesses have increased downside risk because they lack the scale and staying power of their larger competitors.
The Russell 2000 (^RUT) is packed with potential breakout stocks, thanks to its focus on smaller companies with high growth potential.
However, smaller size also means these businesses often lack the resilience and financial flexibility of large-cap firms, making careful selection crucial.
The Russell 2000 (^RUT) is home to many small-cap stocks, offering investors the chance to uncover hidden gems before the broader market catches on.
However, these companies often come with higher volatility and risk, as their smaller size makes them more vulnerable to economic downturns.
Small-cap stocks in the Russell 2000 (^RUT) can be a goldmine for investors looking beyond the usual large-cap names.
But with less stability and fewer resources than their bigger counterparts, these companies face steeper challenges in scaling their businesses.
Over the past six months, Methode Electronics’s shares (currently trading at $6.76) have posted a disappointing 10.2% loss, well below the S&P 500’s 11.3% gain. This might have investors contemplating their next move.
Although Globe Life (currently trading at $128.88 per share) has gained 5.5% over the last six months, it has trailed the S&P 500’s 11.3% return during that period. This was partly due to its softer quarterly results and might have investors contemplating their next move.
General Dynamics’s 22% return over the past six months has outpaced the S&P 500 by 10.6%, and its stock price has climbed to $343.43 per share. This was partly due to its solid quarterly results, and the run-up might have investors contemplating their next move.
Since November 2020, the S&P 500 has delivered a total return of 85.8%. But one standout stock has more than doubled the market - over the past five years, Agilysys has surged 204% to $123.52 per share. Its momentum hasn’t stopped as it’s also gained 21.9% in the last six months thanks to its solid quarterly results, beating the S&P by 10.5%.
Over the past six months, Asure Software’s shares (currently trading at $7.99) have posted a disappointing 18% loss, well below the S&P 500’s 11.3% gain. This may have investors wondering how to approach the situation.
Domo has had an impressive run over the past six months as its shares have beaten the S&P 500 by 19.7%. The stock now trades at $11.20, marking a 31% gain. This was partly due to its solid quarterly results, and the run-up might have investors contemplating their next move.
Over the past six months, The Pennant Group’s shares (currently trading at $26.51) have posted a disappointing 9.9% loss, well below the S&P 500’s 11.3% gain. This may have investors wondering how to approach the situation.
Dayforce’s 17.4% return over the past six months has outpaced the S&P 500 by 6%, and its stock price has climbed to $69.05 per share. This run-up might have investors contemplating their next move.
Over the past six months, Hologic has been a great trade, beating the S&P 500 by 20%. Its stock price has climbed to $74.17, representing a healthy 31.3% increase. This was partly due to its solid quarterly results, and the run-up might have investors contemplating their next move.
Over the past six months, First Merchants’s stock price fell to $35.34. Shareholders have lost 9.8% of their capital, which is disappointing considering the S&P 500 has climbed by 11.3%. This was partly driven by its softer quarterly results and may have investors wondering how to approach the situation.
Zoetis’s stock price has taken a beating over the past six months, shedding 28.6% of its value and falling to a new 52-week low of $116.88 per share. This was partly due to its softer quarterly results and might have investors contemplating their next move.
Granite Construction currently trades at $102.54 and has been a dream stock for shareholders. It’s returned 326% since November 2020, blowing past the S&P 500’s 85.8% gain. The company has also beaten the index over the past six months as its stock price is up 17.9%.
Over the past six months, DNOW’s stock price fell to $12.58. Shareholders have lost 16.8% of their capital, which is disappointing considering the S&P 500 has climbed by 11.3%. This might have investors contemplating their next move.
GXO Logistics trades at $47 per share and has stayed right on track with the overall market, gaining 13.6% over the last six months. At the same time, the S&P 500 has returned 11.3%.
Over the last six months, ServiceNow’s shares have sunk to $821.52, producing a disappointing 19.6% loss - a stark contrast to the S&P 500’s 11.3% gain. This might have investors contemplating their next move.
PepsiCo trades at $146.70 per share and has stayed right on track with the overall market, gaining 11.3% over the last six months. At the same time, the S&P 500 has returned 11.3%.
Over the past six months, Greenbrier’s stock price fell to $42.01. Shareholders have lost 9.5% of their capital, which is disappointing considering the S&P 500 has climbed by 11.3%. This was partly due to its softer quarterly results and might have investors contemplating their next move.
Although Mission Produce (currently trading at $11.43 per share) has gained 6.1% over the last six months, it has trailed the S&P 500’s 11.3% return during that period. This may have investors wondering how to approach the situation.
United Rentals has followed the market’s trajectory closely, rising in tandem with the S&P 500 over the past six months. The stock has climbed by 12.2% to $802.84 per share while the index has gained 11.3%.
Huron trades at $162.26 per share and has stayed right on track with the overall market, gaining 6.7% over the last six months. At the same time, the S&P 500 has returned 11.3%.
Royal Caribbean has been treading water for the past six months, recording a small return of 3.4% while holding steady at $257.76. The stock also fell short of the S&P 500’s 11.3% gain during that period.
Wendy’s stock price has taken a beating over the past six months, shedding 33.3% of its value and falling to $8.17 per share. This may have investors wondering how to approach the situation.
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