In this article, we discuss the 7 best Russell 2000 stocks to buy according to analysts. Moreover, we also discuss the impact of the Fed’s cut cycle on small-cap stocks.
The investor sentiment remains bullish toward the market, especially since the Fed’s recent decision to cut interest rates by half a percentage point, which is seen as a move to sustain economic health rather than a response to economic distress.
Moreover, the recent inflation report also showed positivity. After the first rate cut since March 2020, the August inflation report showed that the Personal Consumption Expenditures (PCE) price index rose 2.2%, the lowest level since early 2021. Core PCE, which excludes food and energy, also rose 0.1% for the month and recorded a 12-month increase of 2.7%.
While the market is reacting positively to the news, some experts are slightly worried about the market trends.
Bernstein’s Insights on Market Trends
Richard Bernstein, CEO of Richard Bernstein Advisors, joined CNBC ‘The Exchange’ on September 23 to discuss what’s happening in the market. He mentioned that stocks of small companies are not doing as well as riskier investments like cryptocurrencies. He is worried that the Federal Reserve is putting too much money into the economy, and it is not being spent wisely.
However, Bernstein believes that small and mid-sized companies will grow a lot by the end of the year, especially compared to the slower growth of big tech companies, such as the “Magnificent Seven.” Bernstein is also concerned that the Fed is lowering interest rates even though the profits are getting better, which might make the situation worse.
When asked if it’s time to focus on big tech stocks, Bernstein said many investors are doing that because of the current market trends. He thinks smaller companies offer better value and growth in the long run. He criticized risky investments like cryptocurrencies, saying they take money away from important areas like infrastructure, which could harm the economy. He warned that financial bubbles, where prices go too high too fast, can be just as harmful as regular inflation.
The bullish sentiment around small-cap stocks is also shared by Greg Tuorto, a portfolio manager at Goldman Sachs Asset Management, as we discussed his interview with Yahoo Finance in our article, 7 Cheap Small-Cap Stocks To Buy Now. Here is an excerpt from it:
“He [Greg Tuorto] highlighted several supportive factors for small caps, including a stable U.S. economy and opportunities in sectors like technology, healthcare, and consumer industries. Despite recent underperformance, he believes small caps are positioned for a rebound, driven by strong earnings growth rather than multiple expansions.
Tuorto also emphasized the potential for small caps to outperform large caps in 2025, given that their earnings outlook appears more favorable.”
With that, we look at the 7 Best Russell 2000 Stocks to Buy According to Analysts.
7 Best Russell 2000 Stocks to Buy According to Analysts
Our Methodology
For this article, we made a list of the 35 biggest best weekly performers of the small-cap index in the week ending September 27. Next, we narrowed our list of 7 stocks with the highest average analyst price target upside. The stocks are listed in ascending order of their price target upside. We also added the hedge fund sentiment around each stock, which was taken from Insider Monkey’s database of over 900 elite hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
7 Best Russell 2000 Stocks to Buy According to Analysts
7. Innodata Inc. (NASDAQ:INOD)
Average Price Target Upside: 113.70%
Number of Hedge Fund Holders: 6
Innodata Inc. (NASDAQ:INOD) is a global data engineering company that operates in multiple countries, including the United States, the United Kingdom, the Netherlands, and Canada. It operates through three primary segments, Digital Data Solutions, Synodex, and Agility.
Each segment plays an important role in providing comprehensive data solutions tailored to meet the demands of various industries. The Digital Data Solutions segment specializes in AI data preparation, including tasks such as collecting and creating training data, as well as integrating AI models.
Synodex focuses on transforming medical records into actionable digital data and uses both proprietary and client data models. Meanwhile, the Agility segment supports marketing and public relations professionals by offerin tools to effectively target and distribute content, while also monitoring and analyzing a wide array of news and social media channels.
Innodata (NASDAQ:INOD) has a Buy rating from 3 analysts and the average price target of $34.00 implies an upside of 113.70% to the stock’s price, as of September 27.
The company expects to achieve at least 40% organic revenue growth in 2024, significantly higher than the 20% year-over-year growth predicted in the previous quarter. It is driven by a strong pipeline of new generative AI services, especially for major tech companies.
At the beginning of 2024, Innodata (NASDAQ:INOD) secured master service agreements with five of the “Magnificent Seven” technology companies. It positions the company to generate revenue from three of these major players this year while making progress with the other two.
On September 17, Craig-Hallum initiated coverage of the stock with a Buy rating and a $23 price target. The firm believes that it is an undervalued stock in the generative AI space.
The firm recognizes the company as a “picks and shovels” opportunity, meaning it provides essential tools and services that will thrive alongside the growth of generative AI technologies.
In Q2, 6 hedge funds tracked by Insider Monkey had investments in Innodata (NASDAQ:INOD), with positions worth $12.977 million. Renaissance Technologies is the top investor in the company as of Q2 and has a stake worth $7.1 million.
6. Piedmont Lithium Inc. (NASDAQ:PLL)
Average Price Target Upside: 119.06%
Number of Hedge Fund Holders: 9
One of the best Russell 2000 stocks, Piedmont Lithium Inc. (NASDAQ:PLL) is a development stage company dedicated to the exploration and development of lithium resources in the United States and internationally.
The company’s flagship initiative, the Carolina Lithium Project, includes approximately 3,706 acres in North Carolina’s Carolina Tin-Spodumene Belt. The area is essential for its high-quality spodumene ore, which serves as a primary source of lithium, an important component for EV batteries.
In addition to the Carolina Lithium Project, Piedmont Lithium (NASDAQ:PLL) owns properties in Bessemer City and Kings Mountain, which improve its growth strategy in the region. With a keen focus on the surging demand for EVs, the company aims to produce lithium hydroxide, an important ingredient for lithium-ion batteries that power these vehicles.
Beyond its operations in North Carolina, the company is also advancing significant lithium projects in Quebec, especially the North American Lithium project. Recognized as the largest spodumene mine in North America, this project is significant for addressing the increasing demand for battery materials.
The company aims to produce approximately 60,000 metric tons of lithium hydroxide annually from these operations, which will play a crucial role in boosting the U.S. lithium supply and supporting the growing battery market.
Moreover, as per the coverage of 10 analysts, the stock has a consensus Buy rating. As of September 27, the average price target of $20.00 represents a 119.06% upside from the current levels.
On September 16, Piedmont Lithium (NASDAQ:PLL) announced a significant development regarding the Ewoyaa Lithium Project in Ghana, where the Environmental Protection Agency granted an environmental permit.
The project, developed in partnership with Atlantic Lithium Limited, is set to produce 365,000 metric tons of spodumene concentrate annually. In a move to improve its portfolio, the company exercised an option to acquire a 22.5% stake in the Ewoyaa Project in 2023, with plans to ultimately secure a 50% equity interest in Atlantic Lithium’s operations in Ghana, subject to governmental approvals.
5. GigaCloud Technology Inc. (NASDAQ:GCT)
Average Price Target Upside: 135.14%
Number of Hedge Fund Holders: 5
GigaCloud Technology Inc. (NASDAQ:GCT) is a company that provides comprehensive B2B eCommerce solutions specifically tailored for large parcel merchandise. The company’s GigaCloud Marketplace seamlessly integrates product discovery, payment processing, and logistics into a single platform, which makes it easy for manufacturers, primarily from Asia, to connect with resellers across the United States, Europe, and Asia.
The platform facilitates cross-border transactions in various categories, including furniture, home appliances, and fitness equipment. It has a strong operational infrastructure and manages 21 warehouses globally, with over four million square feet of storage space, 14 of which are situated in the United States.
The company effectively covers 11 ports of destination and 15 ports of loading, handling approximately ten thousand containers annually through partnerships with leading freight service providers. The extensive logistical network supports the efficient movement of goods, which improves its competitive edge in the eCommerce landscape.
Since its launch in January 2019, GigaCloud Technology (NASDAQ:GCT) has focused initially on the global furniture market and has successfully expanded into other sectors like home appliances and pet products.
The growth trajectory is reflected in the company’s impressive gross merchandise volume (GMV), which reached $438.1 million for the twelve months ending March 31, 2022, up from $190.5 million in 2020.
It forecasts total revenues between $266 million and $282 million for the third quarter of 2024, a sign of a strong business outlook. During the Q2 earnings call, management expressed enthusiasm over the pilot phase of its industry-first Branding-as-a-Service (BaaS), which has garnered interest from both current and prospective marketplace sellers. It seeks to help sellers advance product visibility, which could potentially drive further growth in marketplace transactions.
In September, the company announced a share repurchase program that allows for the repurchase of up to $46 million of Class A ordinary shares over the next year. The decision shows the company’s focus on delivering shareholder value, especially given the impressive $133.5 million generated from operating activities in fiscal year 2023.
With $200 million in cash, cash equivalents, and liquid investments, alongside no external debt, it is well-positioned to execute this repurchase program while continuing to focus on strategic acquisitions.
It takes its place among our best Russell 2000 stocks to buy according to analysts. GigaCloud Technology (NASDAQ:GCT) has a Buy rating from 5 analysts and the average price target of $55.87 implies an upside of 135.14% from the stock’s price, as of September 27.
4. Corbus Pharmaceuticals Holdings, Inc. (NASDAQ:CRBP)
Average Price Target Upside: 225.05%
Number of Hedge Fund Holders: 30
Corbus Pharmaceuticals Holdings, Inc. (NASDAQ:CRBP) is an oncology-focused company dedicated to developing innovative therapies aimed at addressing serious illnesses. The company’s diverse portfolio includes promising candidates that target well-understood biological pathways to create effective treatments for cancer and other conditions.
Among these, CRB-701 stands out as a next-generation antibody-drug conjugate designed to specifically target Nectin-4, a protein found on the surface of certain cancer cells. By binding to these cells, CRB-701 releases a cytotoxic agent that effectively works on cancer cells during trials while sparing healthy tissues, which presents a more targeted approach to cancer therapy.
Another significant asset in the Corbus Pharmaceuticals (NASDAQ:CRBP) pipeline is CRB-601, an anti-integrin monoclonal antibody. The candidate’s preclinical data has shown that it plays a crucial role in blocking TGFβ activation on cancer cells, which improves the immune system’s ability to identify and combat tumors. The dual-action approach of targeting cancer directly while empowering the immune system could yield promising outcomes for patients.
In addition to its oncology therapies, the company is advancing CRB-913, an inverse agonist for the CB1 receptor aimed at tackling obesity. By influencing a receptor in the brain that regulates hunger and fat storage, CRB-913 seeks to reduce appetite and alter the body’s fat processing and offers a potential new avenue for weight loss solutions.
The stock ranks 4th on our list of the best Russell 2000 stocks to buy according to analysts. It has a Buy rating according to 8 analysts. The average price target of $68.00 has a 225.05% upside from the current levels, as of September 27.
At the ASCO 2024 conference in June, the company presented encouraging results for CRB-701, showing an Overall Response Rate (ORR) of 44% in patients with metastatic urothelial cancer and 43% in those with cervical cancer.
These figures indicate that nearly half of the patients with bladder cancer experienced significant tumor reductions, while about two-fifths of cervical cancer patients saw similar improvements.
The Disease Control Rate (DCR) was even more favorable, with rates of 78% for bladder cancer and 86% for cervical cancer, demonstrating that a large portion of patients either experienced tumor shrinkage or stabilization, which is a positive indication in the fight against cancer.
Corbus Pharmaceuticals (NASDAQ:CRBP) reported cash, cash equivalents, and investments totaling $147 million, as of June 30. The company successfully raised $35.6 million through its ATM program in the second quarter and added approximately $28.8 million in net proceeds by August 1, 2024. With a total of about $176 million on hand, the company is well-positioned to fund its operations through the third quarter of 2027, allowing enough time to advance its clinical trials and development programs.
3. Capricor Therapeutics, Inc. (NASDAQ:CAPR)
Average Price Target Upside: 291.96%
Number of Hedge Fund Holders: 6
One of the best Russell 2000 stocks, Capricor Therapeutics, Inc. (NASDAQ:CAPR) is a biotechnology company dedicated to developing innovative cell and exosome-based therapies. They are aimed at treating and preventing muscular diseases and other select conditions.
At the heart of its efforts is deramiocel (CAP-1002), an allogeneic cell therapy currently advancing through Phase 3 clinical trials for Duchenne muscular dystrophy (DMD). The groundbreaking therapy harnesses specialized cells sourced from healthy human heart tissue, which have demonstrated significant potential in repairing damaged muscle and improving heart function. The cells support the immune system and help minimize scar tissue formation, which promotes healing in both cardiac and skeletal muscles.
The ongoing Phase 3 trials for deramiocel are critical as they seek to validate the therapy’s safety and eficacy for patients suffering from DMD. Previous studies have already indicated that this treatment can substantially slow the progression of muscle deterioration and improve cardiovascular health over time.
The positive data could play a crucial role in securing regulatory approval and offering a much-needed solution for a disease that currently lacks effective treatments for its cardiac complications.
In addition to deramiocel, Capricor (NASDAQ:CAPR) is exploring its exosome technology as a next-generation therapeutic platform. The technology aims to create exosomes capable of delivering nucleic acids and proteins to combat a range of diseases.
The stock is a Buy as per the coverage of 5 analysts. As of September 27, the average price target of $39.00 represents an upside of 291.96% to the stock’s current price.
On September 24, the company announced its plans to file a Biologics License Application (BLA) with the U.S. Food and Drug Administration, utilizing existing data related to cardiac health and natural history for patients diagnosed with DMD cardiomyopathy.
It is also planning a post-approval expansion to include treatment for DMD skeletal muscle myopathy. By combining trial cohorts for a more comprehensive study and delaying the unblinding of specific data, the company shows its commitment to expediting a novel treatment in a space with significant unmet needs.
Recent analyst activity has further boosted confidence in its prospects. On September 25, Oppenheimer raised the price target on Capricor (NASDAQ:CAPR) to $43 from $15 and kept an Outperform rating.
It came after the favorable regulatory update and suggests that deramiocel is on a well-defined path toward FDA approval by the latter half of 2025 for addressing cardiomyopathy associated with DMD. The firm expects high demand for this first-of-its-kind therapy.
6 hedge funds tracked by Insider Monkey held positions in Capricor (NASDAQ:CAPR) at a stake value of $4.156 million in Q2. Millennium Management has increased its stake in the company by 64% to 479,510 shares worth $2.287 million and is the most significant shareholder, as of the second quarter.
2. Skye Bioscience, Inc. (NASDAQ:SKYE)
Average Price Target Upside: 380.00%
Number of Hedge Fund Holders: 12
Skye Bioscience, Inc. (NASDAQ:SKYE) is a biopharmaceutical company dedicated to pioneering treatments for metabolic health by exploring new therapeutic pathways. The focus is on developing next-generation molecules that target G-protein coupled receptors, an important area in biopharmaceutical research.
The company’s approach is to create first-in-class therapeutics that demonstrate clinical efficacy and stand out in the marketplace due to unique mechanisms of action. A key candidate in this pipeline is nimacimab, a negative allosteric modulating antibody that specifically inhibits the CB1 receptor, which is known to influence appetite and metabolism.
Currently, Skye Bioscience, Inc. (NASDAQ:SKYE) is conducting a Phase 2 clinical trial known as the CBeyond study to evaluate the effectiveness of nimacimab in addressing obesity. The trial will provide two important interim data updates in the second and fourth quarters of 2025, which could significantly impact the company’s trajectory.
The obesity treatment market is projected to reach an astonishing $130 billion by 2030, according to Goldman Sachs Research. While numerous weight loss drugs are in the pipeline by other companies, nimacimab’s unique mechanism may set it apart from the competition.
By inhibiting the CB1 receptor, this treatment seeks to facilitate weight loss while minimizing common side effects, such as gastrointestinal discomfort, that are often associated with other medications. Furthermore, nimacimab could help preserve lean muscle mass during weight loss, which is crucial for overall health and well-being.
In addition to evaluating nimacimab on its own, the CBeyond study also explores the possibility of combining this treatment with a GLP-1 agonist. GLP-1 agonists are already established in managing weight and diabetes, so this combination could improve the overall effectiveness of treatment, potentially offering a comprehensive solution for patients battling obesity.
Skye Bioscience, Inc. (NASDAQ:SKYE) is in a stable position, having cash and cash equivalents of $74.1 million, as of June 30. The financial cushion is expected to support operations through at least the first half of 2027, that provides a runway for continued research and development.
It is one of the best Russell 2000 stocks to buy according to analysts. The stock is a Buy according to 5 analysts and its average price target of $18.00 has an upside of 380.00%, as of September 27.
1. Amprius Technologies, Inc. (NYSE:AMPX)
Average Price Target Upside: 395.50%
Number of Hedge Fund Holders: 5
Amprius Technologies, Inc. (NYSE:AMPX), established in 2008, is solidifying its position in the energy storage sector with its advanced lithium-ion batteries. The company offers cutting-edge silicon anode technology, which significantly improves battery performance compared to conventional alternatives.
It is especially essential for aviation applications, including unmanned aerial systems (UAS) and electric vertical take-off and landing (eVTOL) aircraft. The company’s latest offerings, the SiCore and SiMaxx battery platforms, achieve impressive energy densities of up to 500 Wh/kg and 1,300 Wh/L, which makes them highly suitable for demanding electric mobility uses.
As per the coverage of 7 analysts, the stock has a consensus Buy rating. As of September 27, the average price target of $5.50 has a 395.50% upside from the present levels. It tops our list of the best Russell 2000 stocks to buy according to analysts.
Amprius Technologies (NYSE:AMPX) was part of 5 funds’ portfolios tracked by Insider Monkey and the total stake value was $840,000 in the second quarter.
In 2023, the company unveiled plans for a state-of-the-art gigawatt-scale manufacturing facility in Brighton, Colorado. The expansive 775,000-square-foot site is designed to meet surging customer demand for high-performance batteries.
The factory is said to begin operations in 2025, starting with an initial capacity of 500 megawatt-hours (MWh) and a potential to ramp up to 5 gigawatt-hours (GWh) within its initial footprint. The significant boost in manufacturing capability marks a crucial step in the company’s growth strategy.
In September 2023, the Brighton City Council approved an ordinance that allows Amprius Technologies (NYSE:AMPX) to utilize a substantial 103-acre site, which includes a large existing facility.
The approval is an important part of the company’s expansion, as it sets the stage for the production of next-generation lithium-ion batteries. The company is also focused on its existing facilities, with plans at Amprius Labs to advance production capacity by tenfold. The expansion will support current customers and aid in qualifying new customers, which could minimize risks as the company looks to capitalize on growth opportunities beginning in 2025.
As the aviation sector rapidly evolves, it is estimated that battery demand will surpass $49 billion by 2025. The company’s innovative products are well-positioned to capture a significant share of this market. By investing in advanced manufacturing capabilities and focusing on high-energy density solutions, it is making efforts to advance in a rapidly expanding industry.
While we acknowledge the potential of Amprius Technologies, Inc. (NYSE:AMPX) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AMPX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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