The Russell 2000, an index tracking the performance of small-to-mid-cap companies, ended 2023 in better shape than when it started. In particular, Russell 2000 stocks 16.8% in 2023, below that of both the S&P 500 and Nasdaq indices, which appreciated 24.2% and 43.4%, respectively. The index had been trailing the S&P 500 and Nasdaq since then. In 2024, the Russell 2000 is down more than 1% while the S&P500 and Nasdaq are trading upward at 5.1% and 4.4%, respectively.
Still, there are some stocks worth looking at in the Russell 2000, and there are several of which Wall Street is even excited about. Below are three names.
Navitas Semiconductor Corporation (NVTS)
Navitas Semiconductor Corporation (NASDAQ:NVTS) develops gallium nitride power integrated circuits and digital isolators used in power conversion and charging. The company’s end-market applications include data centers, solar energy, electric vehicles, and the smart grid. Moreover, Navitas’s reach covers not only the United States but also Europe, China, and other parts of Asia.
In their Q3 earnings report, their gallium nitride solutions received much attention. This particular semiconductor enables fast charging, not just in EVs but also in mobile phones. Chinese smartphone OEMs Oppo and Xiaomi are using these technologies to provide consumers with handsets that have fast charging capabilities. The company saw revenues rise by 22% in the third quarter, and as the handset market rebounds, Navitas Semiconductor could see more growth in the future.
Navitas Semiconductor currently maintains a “Strong Buy” rating from Wall Street.
ACM Research
ACM Research (NASDAQ:ACMR) is another semiconductor equipment manufacturer, and since 2023, the company has been one of the more promising Russell 2000 stocks. This one supplies semiconductor manufacturers with wet processing equipment and technologies. ACM Research has a particular focus on China’s domestic semiconductor market. This can provide an opportunity for long-term growth as the sector continues to make advances in technological capabilities.
ACM Research’s earnings results throughout 2023 were admittedly impressive and beat Wall Street’s estimates. As a result, ACM’s share price skyrocketed more than 153% in 2023. However, we should not divorce ACMR’s performance from China’s economic recovery. They’re intrinsically related, and further hiccups in the way in which China’s government handles the ongoing economic slowdown can spur volatility into ACM Research’s share price. Shares in the semiconductor equipment stock have fallen more than 6% since the start of trading in January.
Still, the company is trading at relatively cheap multiples. ACMR’s forward EV/EBITDA is around 10.1x and its forward P/E ratio is 17.3x. ACM Research’s cheap multiples coupled with its growth prospects could help revive its current lukewarm performance in the near and medium term.
Q2 Holdings
Q2 Holdings (NYSE:QTWO) is the only fintech company to make this list. In particular, Q2 provides a number of digital banking solutions to community and regional banks in order for them to better serve their customer base. For over a decade since the company went public, Q2 has delivered double-digit revenue growth on a year-over-year basis, and the company has also improved net margins in the past couple of years.
The fintech company’s fourth-quarter results came in line with Wall Street estimates. Revenue for the quarter came in at $162.1 million, growing by more than 11% Y/Y, while full-year revenue was around $624.6 million, growing by just over 10% on a year-over-year basis.
According to Koyfin, there are 16 analysts covering Q2 Holdings, and the company maintains a “Strong Buy” rating. Q2 shares have risen 25.7% over the past 12 months.
On the date of publication, Tyrik Torres 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.
