Wall Street Favorites: 3 Russell 2000 Stocks with Strong Buy Ratings


  • These 3 Russell 2000 stocks have a “Strong Buy” rating from analysts:
  • ACM Research (ACMR): ACMR will continue to benefit from China’s semiconductor industry’s growth.
  • MicroStrategy (MSTR): Bitcoin ETF approval could help boost the value of MSTR’s massive bitcoin portfolio.
  • DHT Holdings (DHT): The Red Sea debacle is ongoing and shipping companies, like DHT, are likely to receive a significant cash windfall.
Russell 2000 Stocks to Buy - Wall Street Favorites: 3 Russell 2000 Stocks with Strong Buy Ratings

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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. Outside of just tracking some pretty obscure companies that tended to underperform, the Russell 2000 was also undoubtedly shaken by the U.S. banking crisis in March. The index had been trailing the S&P 500 and Nasdaq since then.

Still, a new year has come, and there are some stocks worth looking at in the Russell 2000, several of which Wall Street is even excited about. Below are three names.

ACM Research (ACMR)

a magnifying glass enlarges the ACM logo on a website
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ACM Research (NASDAQ:ACMR) is a leading supplier of wet processing equipment and technologies for the semiconductor industry. What makes ACM Research unique is its focus on the China semiconductor market. While some may see this as a weakness, what investors should recognize is that China’s semiconductor space has come a long way and has even surprised U.S. policy makers in its resilience. In turns out attempting to make playing field lopsided only made China’s domestic industry more competitive. Companies supplying manufacturing machinery to this burgeoning semiconductor sector could benefit tremendously in the long run.

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. In the current calendar year, ACM’s stock price has begun to trend downward, but I think investors should view this as a potential buying opportunity, as ACMR’s valuation still looks cheap. In particular, the company’s enterprise value to EBITDA ratio trades around 9.5x forward EBITDA.

MicroStrategy (MSTR)

MICROSTRATEGY - sign at headquarters building. MSTR stock.
Source: DCStockPhotography / Shutterstock.com

MicroStrategy (NASDAQ:MSTR) had made one or two of my “sell” lists in 2023. My point was that the company’s valuation was too dependent upon the fluctuating price of bitcoin. For those who don’t know, while MicroStrategy is a software company that specializes in business intelligence and analytics, helping improve the efficiency of users’ workflows, the company is better known for its large Bitcoin portfolio.

The company’s stock has appreciated 346% in 2023, and a lot of that performance mimicked Bitcoin (BTC-USD) surge. The famed cryptocurrency had a great run last year, a lot of which had to do with bets on the approval of Bitcoin ETFs. Wall Street still seems happy with the stock. Wall Street analysts have given MSTR a “Strong Buy” rating, and the average 12-month price target implies there is at least a 21% gain from the current share price.

DHT Holdings (DHT)

Crude oil tanker and LPG Loading in port at sea view from above. Aerial view oil tanker ship shot from drone. Oil prices, oil shipping, oil stocks.
Source: Avigator Fortuner / Shutterstock.com

Shipping stocks are likely to benefit from a huge windfall in 2024, and DHT Holdings (NYSE:DHT) is likely to be one of these beneficiaries. DHT, in particular, is a leading oil tanker company with a fleet of 21 very large crude carriers (VLCCs) that can each carry up to 2 million barrels of oil. The company had spent the latter half of 2023 benefitting from higher “ton-miles” due to strong demand from East Asian countries, particularly from China, and the need to source crude from the United States, Brazil and Guyana as Russia and Middle Eastern petrostates pursued supply cuts.

Another factor that will play into DHT’s earnings potential in 2024, is this Red Sea debacle. Yemen-based Houthi rebels have made effective attacks on ships going through the channel. The United States and the United Kingdom have reacted by bombing “Houthi targets” in Yemen. So far, this has not led to a safer Red Sea or global trade stabilization. Many shipping companies have directed their vessels to take the long way in order to reach Europe. Moreover, these kinds of asymmetric geopolitical conflicts are not likely to be resolved with simple solutions. In fact, the Red Sea blockage could go on for months.

Ultimately, while upsetting for consumers, shipping companies are likely to make a killing off of these geopolitical tensions. And shipping companies like DHT that give dividends to their shareholders could very well use their cash flow windfall to gift investors with a “special dividend,” juicing investor returns.

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.

Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.

Article printed from InvestorPlace Media, https://investorplace.com/2024/02/wall-street-favorites-3-russell-2000-stocks-with-strong-buy-ratings/.

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