Making the Grade
10 Small Caps With Triple-Digit Revenue Growth
This year, the Dow Jones Industrial Average, the Nasdaq Composite and S&P 500 all hit new all-time highs. And they didn’t do so just once.
They notched new records more than 20 times.
Despite concerns swirling around the U.S.-China trade war, bond yield inversions and slowing global growth, U.S. equities couldn’t be stopped.
But 2019 hasn’t been a breakout year for everyone. In fact, there’s one group of companies that’s failing to keep up.
I’m talking about small caps.
Traditionally, during periods of international uncertainty, these have been favorites among investors. That’s because they’re seen as bets on the domestic economy, not the global one.
But investors are wary right now. That creates a situation where we have small companies with tremendous upside and growth potential… trading at huge discounts.
And there are some very attractive names worth looking into in the small cap space.
10 Small Caps to Watch
Year to date, the Russell 2000 small cap index has trailed its larger brethren…
But to say small caps have been punished in 2019 is far from accurate.
For those looking for value and growth, there’s a lot to like about the 2020 prospects.
The Russell 2000’s 52-week high of 1,618.37 was set back in May.
And small caps are currently trading 8.5% below their all-time high of 1,742.09, set more than a year ago in August 2018.
They’ve been in this drawn-out correction that they’re still recovering from.
But there’s more to this underperformance in 2019 than merely a couple of percentage points.
Of course, first and foremost, if small caps are lagging, it demonstrates that investors are looking for safety.
They’re shedding smaller names. And they’re looking to park their money in larger, more stable companies (often dividend-paying ones).
Which means there are plenty of fast-growing small caps that are on sale right now.
Keeping an eye on 2020, let’s look at 10 small caps that are expected to see revenue grow 100% or more next year!
As we can see, some of these small cap darlings are poised to see enormous upswings in sales.
And a lot of that has to do with what I discussed in last week’s Making the Grade about the explosive potential of biotechs.
Way out in front is the biopharmaceutical Immunomedics (Nasdaq: IMMU). The company focuses on monoclonal antibody-based products to treat cancer.
Shares are currently trading more than 17% below their 52-week high. And business is about to go into hyperdrive.
In 2020, revenue is projected to skyrocket 8,207.9% to $63.14 million!
That’s more than three times larger than the second-highest increase on our list, belonging to Zogenix (Nasdaq: ZGNX).
Zogenix is expected to see 2020 sales surge 2,663.3%.
It should probably come as no surprise that this is also a pharmaceutical company. Though it specializes in treating central nervous system disorders.
Shares also nearly 20% below their 52-week highs.
We then have The Medicines Company (Nasdaq: MDCO). Revenue for this biopharmaceutical is projected to soar 2,617.3% to $33.15 million. And shares are currently trading just below their 52-week high.
But looking at this list of booming 2020 revenue growers, you’ve likely noticed a trend.
We have names like BridgeBio Pharma (Nasdaq: BBIO), Sage Therapeutics (Nasdaq: SAGE), Ra Pharmaceuticals (Nasdaq: RARX) and China’s Zai Lab Ltd. (Nasdaq: ZLAB).
These are all from the same fast-growing sector: biotech.
But what about the other three?
Two of the remaining companies are from the energy sector.
There’s the infrastructure company New Fortress Energy (Nasdaq: NFE), which is projected to see revenue grow 278.6% to $793.32 million.
And there’s the liquefied natural gas shipper Tellurian (Nasdaq: TELL). Its revenue is expected to jump nearly 450% to $158.89 million next year.
The third is an interesting one: GSX Techedu (NYSE: GSX). This is a Chinese company that offers online K-12 after-school tutoring. It also offers personal interest courses such as calligraphy, guitar and yoga.
With education being such a priority in China, business for GSX is blasting off. Revenue should increase at least 158% in 2020 to $731.94 million.
High Growth on Sale
Small caps are some of my favorite companies to trade.
They offer substantial upside and can break out exceptionally fast.
Though you always want to make sure you’re keeping that small cap price premium in check.
That’s why I’m always looking for small caps that have had recently pulled back or dipped. Because I want to buy high growth at a discount.
Here’s to high returns,
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