04/28/2017

20 Attractive Small Caps Including Planet Fitness Inc. (NYSE:PLNT) from the Russell 2000 (INDEXRUSSELL:RUT)

20 Attractive Small Caps Including Planet Fitness Inc.

While most of the focus of our research is on Large Cap companies, typically in the S&P 500 or Russell 1000 indices, our research has a very good track record for identifying winners and losers in the small cap Russell 2000 index as well. In one of our posts from March of 2014 we recommended reducing exposure to small cap equities as they had reached bubble-level valuation ranges. Only twice in the previous 20 years had the Russell 2000 looked so overvalued. During our recommended moratorium on small caps (March 2014 to March 2016) the Russell 2000 index delivered -9.57% returns. Since then, the Russell 2000 finally has moved back into normal valuation territory and we issued an article on March 25, 2016 ending our market call of reducing exposure to small cap stocks. Small Caps have enjoyed a nice rally since, delivering over 7% returns since our call to get back into the small cap space.

Since the small caps have been performing so well of late and are still trading at a normal valuation level, we have decided to provide another list of attractive small-cap equities for those looking to add positions in the space. These companies all earn an Investment Grade of A and have attractive valuations. By using AFG’s Investment Grade, back-tests show that a strategy of buying A & B graded companies while avoiding D & F grade companies’ investors can put themselves in a better starting point to outperform. The companies below have been graded on Valuation, Quality and Momentum factors and all have several characteristics inherent in companies likely to outperform.

20 Attractive Small Cap Stocks – Russell 2000

Ticker Name Sector Investment Grade
TSE TRINSEO S.A. Basic Material A
CBPX CONTINENTAL BUILDING PRODUCTS, Capital Goods A
KLXI KLX INC Consumer Durable A
WNC WABASH NATIONAL CORPORATION Consumer Durable A
DF DEAN FOODS CO. Consumer Non Durable A
OME OMEGA PROTEIN CORPORATION Consumer Non Durable A
UNFI UNITED NATURAL FOODS, INC. Consumer Non Durable A
CZR CAESARS ENTERTAINMENT CORP Consumer Services A
CMPR CIMPRESS NV Consumer Services A
PLNT PLANET FITNESS INC Consumer Services A
NGHC NATIONAL GENERAL HOLDINGS CORP Financials A
INCR INC RESEARCH HOLDINGS INC Miscellaneous A
PRAH PRA HEALTH SCIENCES INC Miscellaneous A
SNX SYNNEX CORP Miscellaneous A
CRUS CIRRUS LOGIC INC Technology A
NTGR NETGEAR, INC. Technology A
PLCM POLYCOM, INC. Technology A
QLGC QLOGIC CORPORATION Technology A
FRO FRONTLINE LIMITED Transportation A
SFL SHIP FINANCE INTERNATIONAL LTD Transportation A
About Value Expectations 18 Articles

ValueExpectations.com, by the founders of The Applied Finance Group is an investment blog that provides institutional quality equity research using AFG’s proprietary Economic Margin framework.

About Value Expectations 18 Articles

ValueExpectations.com, by the founders of The Applied Finance Group is an investment blog that provides institutional quality equity research using AFG’s proprietary Economic Margin framework.