On Wall Street, small-cap stocks have always been an attractive option for investors looking for high-growth opportunities. These smaller companies, with market values under $2 billion, have the potential to disrupt established markets and deliver significant returns. However, it’s important to note that small-cap stocks can also be more volatile and sensitive to market fluctuations compared to their larger counterparts.
While the S&P 500 index has seen a 17% increase since January, the Vanguard Small-Cap Index Fund ETF (NYSEARCA:VB) has lagged behind, only gaining 2% year-to-date (YTD). This underperformance suggests that small-cap stocks may be due for a rally. Here are three high-growth small-cap stocks that DailyBubble believes could see significant appreciation in the near future.
Bloomin’ Brands (NASDAQ:BLMN) is a key player in the casual dining sector, known for brands like Outback Steakhouse and Carrabba’s Italian Grill. Despite reporting mixed first-quarter 2024 earnings, with revenue down 4% year-over-year to $1.2 billion, Bloomin’ Brands exceeded expectations with U.S. comparable sales outperforming industry averages. The company’s partnership with activist investment firm Starboard Value indicates potential for increased shareholder value through strategic initiatives and operational improvements.
MillerKnoll (NASDAQ:MLKN) is a respected player in the commercial office furniture design segment, offering furniture and interior design services for workspaces. The company reported strong fourth-quarter earnings, with orders increasing 1.1% to $933 million and adjusted diluted EPS soaring 63% to 67 cents. MillerKnoll’s sustainability efforts and award-winning designs are driving customer demand and market share growth, positioning the company for continued success.
Tegna (NYSE:TGNA) is a media company that operates dozens of television stations in the U.S., delivering a mix of TV programming and digital content. Despite reporting a 4% decline in revenues in the first quarter of 2024, Tegna is expanding its local news and sports offerings and securing exclusive partnerships to drive future growth. The company plans to return a significant portion of its adjusted free cash flow to shareholders through dividends and buybacks.
Overall, DailyBubble sees potential in these high-growth small-cap stocks despite their recent performance. While there are risks associated with investing in small-cap companies, the potential for significant appreciation makes them an attractive option for investors looking to outperform the market.