Any investor who believed the U.S. presidential election would lead stocks to turn south has proven to be mistaken. Equities have soared, with hot stocks and hot sectors seemingly left and right.

Indeed, since Oct. 30 (the Friday before Election Day), the three major indices have gained at least 13%. But small-cap stocks have been the big winners.

The small-cap-heavy Russell 2000 has rallied a sharp 24% over the same seven-week stretch. The iShares Core S&P Small-Cap ETF (NYSEARCA:IJR) has done even better, returning 27%. Even those figures understate how many small-cap stocks have absolutely soared.

There are now 52 small-cap stocks that have doubled or better just in the last three months. That’s 3% of the entire small-cap universe. A reasonably diversified small-cap portfolio would have better than even odds of having at least one of those hot stocks.

What’s interesting is how many of these hot stocks are in hot sectors (outside of biotech, which always has its share of huge winners). That’s also a bit worrisome. It’s not necessarily news (from the election or otherwise) that has moved the biggest small-cap winners, but rather a torrent of investor optimism toward faster-growing industries. That optimism can, and often does, reverse.

Of course, optimism has won the day since March, and for many years before the early-year market-wide plunge. As long as that trend continues, these 10 hot stocks that led the late 2020 rally could be big 2021 winners as well:

• Blink Charging (NASDAQ:BLNK)
• CIIG Merger (NASDAQ:CIIC)
• Bally’s Corporation (NYSE:BALY)
• ReneSola (NYSE:SOL)
• Riot Blockchain (NASDAQ:RIOT)
• Marathon Patent Group (NASDAQ:MARA)
• 3D Systems (NYSE:DDD)
• GrowGeneration (NASDAQ:GRWG)
• Centennial Resource Development (NASDAQ:CDEV)
• Altus Midstream (NASDAQ:ALTM)

Hot Stocks: Blink Charging (BLNK)

Electric vehicle stocks have been among the biggest winners in this rally. Even by the standards of the sector, however, BLNK stock has skyrocketed, more than quadrupling since Oct. 30.

The optimism toward the sector makes some sense. The question for both BLNK and EV stocks as a whole is whether the rallies have gone too far.

Indeed, BLNK now has a market capitalization north of $1 billion. It generated less than $4 million in revenue through the first nine months of 2020. U.S. election results, which are likely to result in a divided government or something quite close, don’t look quite as bullish for electric vehicles as investors seem to believe.

It’s possible the sector is just playing catch-up, and BLNK isn’t the only charging name among recent hot stocks. Switchback Energy (NYSE:SBE) has more than tripled since it announced a merger with ChargePoint in September. ChargePoint has positioned itself as a play on EV growth, and clearly investors see BLNK stock as a similar bet. After the rally, however, it may not be a bet worth taking.

CIIG Merger (CIIC)

Switchback Energy is one of several special purpose acquisition companies (SPACs) that have targeted the electric vehicle sector. SPACs generally have done quite well in 2020. So have EV stocks. It’s no surprise that the combination has been explosive.

CIIG Merger has been one of the bigger winners, moving from $10 in mid-November to a current $28 after announcing plans to merge with Arrival.

EV manufacturers have been particularly fertile ground for SPACs, with Fisker (NYSE:FSR), Nikola (NASDAQ:NKLA) and Lordstown Motors (NASDAQ:RIDE), among others, going public via the SPAC route. CIIC stock has outperformed those peers so far, and there are reasons why.

U.K.-based Arrival has plans to develop both electric vans and buses. Orders from United Parcel Service (NYSE:UPS) should get the company off to a good start. A pro forma market capitalization in the range of $15 billion does price in an awful lot of success, but still is only about 1x Arrival’s guidance for 2024 revenue.

It’s worth noting that other EV manufacturers that have gone the SPAC route have seen big pullbacks from their highs. CIIC may not prove to be an exception. But, at the least, the rally makes some sense, and there’s still an intriguing long-term case after that rally.

Bally’s Corporation (BALY)

The rally in casino stocks certainly has helped BALY stock. Optimism toward online sports betting and iGaming has led investors to look past the short-term impact of the novel coronavirus pandemic.

But Bally’s itself deserves credit as well. Eighteen months ago, the company was known as Twin Rivers Worldwide. At the time, Twin Rivers owned just four casinos, along with a horse racing track in Colorado. Since then, it has added nine properties, including six divested as part of the merger between Eldorado Resorts and Caesars Entertainment (NASDAQ:CZR). One of those casinos was the Bally’s in Atlantic City; a later deal picked up the Bally’s brand as well.

Combined with the purchase of casinos in Colorado, Twin Rivers is profiting from online gambling. It has access agreements in New Jersey and Colorado. And a well-received deal with Sinclair Broadcasting (NASDAQ:SBGI) will attach the newly purchased Bally’s brand to a variety of nationwide gaming-focused media content.

Bally’s management simply has done an excellent job. In fact, there’s some irony to the fact that the company is following a similar path to Eldorado, which used smart M&A to expand from a tiny regional operator into, thanks to the Caesars merger (in which Eldorado kept the Caesars name), the largest gaming company in the U.S.

Eldorado proved to be one of the best stocks of the past decade. Bally’s, with the added tailwinds of sports betting and iGaming, could be one of the better stocks of this decade.

ReneSola (SOL)

Solar stocks too have benefited from the newfound optimism toward “green energy” plays. The Invesco Solar Portfolio ETF (NYSEARCA:TAN) has rallied 33% since Oct. 30.

ReneSola, a worldwide developer of solar projects, has been one of the sector’s biggest winners. Just a few months ago, SOL stock was at $1. As recently as September, ReneSola raised $5 million in capital by selling shares at $2.

The rally itself should help the company going forward, providing the option to sell more equity at sharply higher prices. That aside, ReneSola still has a chance. Solar power continues to grow, and after more than a century may finally be ready for widespread use. ReneSola’s significant presence in Europe gives it exposure to more aggressive government policies and subsidies.

As with many green energy plays of late, there’s a worry that the rally has gone too far. It’s difficult to perfectly justify why SOL stock traded at $2 in early October and $8 on Wednesday. Still, the long-term outlook for the industry looks bright (pardon the pun). If ReneSola can capitalize on growing solar demand, the rally in SOL stock may be just beginning.

Riot Blockchain (RIOT)

Bitcoin is hot again, reaching an all-time high last week. The sizzling cryptocurrency has brought a pair of derivative stocks along for the ride.

One is Riot Blockhain, which has more than tripled since the beginning of November. And as far as “hot stocks” go, RIOT has more than its fair share of question marks.

After all, Riot only moved into cryptocurrency the last time Bitcoin soared. Until October 2017, it was a biotech company. It jumped on the bitcoin/blockchain fad of the time, which led RIOT stock to soar. Unfortunately, both bitcoin and Riot fizzled from there; RIOT would lose more than 90% of its value.

This time may be different — somewhat. Riot has moved aggressively into Bitcoin mining, so there is at least a real business here. That wasn’t yet the case when the company first moved into the industry. But the broad concerns still hold. Mining revenue year-to-date is less than $7 million; Riot now has a market capitalization over $500 million. The business model has shifted again; this is now essentially a pure-play miner, as opposed to its previous plan to “build and support blockchain technology companies.”

Those concerns aside, it’s still far from clear that the existing business is worth more than half a billion dollars, or that investors are better choosing RIOT stock over simply buying Bitcoin directly. For investors who believe this small-cap rally as a whole has echoes of a bubble, RIOT is a core example why.

Marathon Patent (MARA)

Marathon Patent has similar question marks. Throughout its history, Marathon has chased the newest fad. In the early 2010s, the company was known as American Strategic Minerals, and it supposedly was looking to discover uranium and vanadium. That plan lasted about six months. The company flirted briefly with real estate in California before it became what is derisively known as a “patent troll.”

That business didn’t work, either. Marathon too jumped on the bitcoin wave of late 2017, pivoting into the mining business via a merger with Global Bit Venture. MARA stock saw a short-lived spike, but the same pattern held: any trader who didn’t get out at or near the top wound up losing.

Perhaps this time will be different. Like Riot Blockchain, Marathon does have a legitimate mining business. A joint venture agreement inked in October should lower power costs (hugely important for the energy intensive endeavor). But history suggests caution, as does a rally that has far outpaced that of the underlying cryptocurrency. MARA has made the list of hot stocks before, and it has always ended badly for shareholders.

3D Systems (DDD)

DDD made plenty of “hot stocks” lists in the past, but the company simply hasn’t delivered on its promise. Optimism toward 3D printing helped boost the stock from under $15 in early 2012 to (briefly) over $90 two years later. By late 2015, growth had disappointed and the gains had entirely disappeared. DDD spent the next five years as at best “dead money” before fading to an 11-year low in September.

Since then, however, DDD stock has rallied 135%. Like so many hot stocks at the moment, the question is whether sector optimism is at play, or the investment case has notably strengthened. Both arguments can be made for 3D Systems.

After all, it seems likely that the SPAC merger of Trine Acquisition (NYSE:TRNE) with Desktop Metal has boosted DDD in sympathy. TRNE shares have risen 150% since the merger was announced last month. HP (NYSE:HPQ), which has a solid 3D printing business of its own, likely has benefited as well.

But 3D Systems has made some progress. Third quarter results on Nov. 5 were far from spectacular, but showed a continuing recovery from the worst impacts of the pandemic. Cost-cutting measures should save about $60 million annually, a significant sum against a market capitalization of $1.4 billion. Those savings moved 3D’s adjusted operating income to breakeven in Q3 despite short-term pressures.

There is a case that 3D Systems finally can start to meet expectations. But there’s a case that this is just a “dead cat bounce” as well. This, after all, is a company that went public in 1987. Over the last 33 years, even with a 100%-plus rally since early October, DDD stock has returned 8%.

GrowGeneration (GRWG)

Cannabis stocks have been some of the big winners in the post-election rally. The ETFMG Alternative Harvest ETF (NYSEARCA:MJ) has gained 44% since Oct. 30.

To some extent, the rally doesn’t make a lot of sense. Canadian cannabis plays like Canopy Growth (NASDAQ:CGC) moved sharply higher after the election, likely due to big wins in state-level elections. But a split Senate suggests federal legalization — which is what is required for Canadian players to enter the U.S. — remains a ways off.

The rally in GRWG stock, however, is more logical. The retailer of cannabis cultivation supplies is a classic “picks and shovels” play on state-level legalization. GrowGeneration doesn’t need federal help; indeed the company should be active in 15 states by next year, with more no doubt to follow.

Its valuation is a bit of a concern, given that GRWG has more than doubled in the last two months. But there’s huge potential here, making the stock a still-logical play on growing demand for legal cannabis.

Centennial Resource Development (CDEV)

Oil and gas names have seen a nice bounce of late as well. Optimism toward a return to normalcy no doubt has sparked prediction of normalized demand. West Texas Intermediate crude prices still are low from a multi-year perspective, but they have at least stabilized in the low $40s in recent weeks.

In recent months, we’ve even seen a return of mergers and acquisitions, with Chevron (NYSE:CVX) acquiring Noble Energy, ConocoPhillips (NYSE:COP) buying Concho Resources (NYSE:CXO) and Pioneer Natural Resources (NYSE:PXD) tying up with Parsley Energy (NYSE:PE).

In that environment, it’s not a surprise that small-cap oil and gas names have done well. They are the highest-risk and highest-reward names in a sector that itself attracts more aggressive investors.

CDEV stock certainly fits. Just two months ago, a stock price near 60 cents priced in a significant risk of bankruptcy. The stock now has tripled to its highest level since June. Other small-cap E&P (exploration and production) names like Callon Petroleum (NYSE:CPE) and QEP Resources (NYSE:QEP) have soared too.

The rallies certainly can continue — as long as the underlying crude price cooperates. Of course, it often hasn’t, the core reason that so many of the hot stocks in O&G threatened multi-year lows before their recent gains. But for investors who believe the “death of crude” narrative is overdone, it’s easy to argue that the rallies in the likes of CDEV and CPE are only just beginning.

Altus Midstream (ALTM)

Oil producers aren’t the only ones that have done well in the recent rally. Pipeline operators like Altus Midstream have been big winners, too.

Indeed, ALTM stock saw one of the biggest post-earnings rallies in recent memory. After third quarter earnings were released on Nov. 5, the stock more than tripled.

The rally has continued: ALTM has gained another 53% even after the post-earnings spike. Incredibly, based on commentary for the 2021 dividend, the implied yield still sits well above 10%. Meanwhile, the strength in E&P names suggests that the midstream bull case — which is based on volume moving through pipelines, rather than the price of that volume — still could be holding up.

In other words, even with a nearly 400% rally since early November, ALTM is one hot stock that might not yet be ready to cool off.

On the date of publication, Vince Martin did not have (either directly or indirectly) any positions in the securities mentioned in this article.