When we think about the major indexes, we usually think of the NASDAQ, the S&P 500 and the Dow Jones Industrial Average. But if you want a full picture of the US stock market, you should also include the Russell 2000. This is the index that holds 2000 of the top American small-cap stocks, and sifting through it can be incredibly beneficially to finding small-cap gems to round out your portfolio. Likely, you have probably seen it mentioned by its ticker symbol IWM, which is the ETF that tracks the index.
For those unfamiliar or still apprehensive about IWM, it is worth noting that in his most recent 13 F, Stanley Druckenmiller, considered to be one of the greatest investors ever, disclosed a bullish position in IWM call options with a notional value of $664 million. In other words, he thinks small-caps are about to rip higher! For investors looking to get a piece of this growth, here are three stocks from the Russell 2000 worth considering in May 2024!
Super Micro Computer Inc (SMCI)
Super Micro Computer Inc (NASDAQ:SMCI) has been one of the hottest chip stocks in 2024. The company has enjoyed its close relationship with NVIDIA (NASDAQ:NVDA) during the surge in AI chips and infrastructure demand. Analyst price targets are all over the map for this stock, ranging from $285.00 to over $1500.00. Overall though, the average price target of $1,057.46 confidently represents a near 20% upside from today’s price.
So far in 2024, shareholders of SMCI have seen a return of a whopping 211%. Given that Wall Street expects AI demand to be a global secular trend for the next decade, it’s easy to see why stocks like SMCI are getting love from investors. After all, SMCI’s high-performance server and storage solutions have been crucial in powering cloud computing, enterprise data centers, 5G computing, and more!
After gaining over 200% this year, many investors might think SMCI is overvalued. Surprisingly, the stock trades at just 4.3x sales and 24.5x forward earnings. It has also grown its net income at a CAGR of 70% over the past five years and a staggering 126% over the past three. With new products such as GB200 set to to continue expanding SMCI’s rack-scale plug-and-play as well, investors can be confident that SMCI will continue being in demand!
CleanSpark (CLSK)
CleanSpark (NASDAQ:CLSK) is a Bitcoin mining company making headlines this year. As the crypto bull run continues, CleanSpark and other miners should benefit from a renewed interest in Bitcoin. Analysts are bullish too. Currently, Wall Street’s lowest price target is $20.00, about 25% higher than today’s price. The highest price target? A whopping $30.00 nearly 100% higher than the current price of $16.03.
A lot of people see the word crypto and run. However, Bitcoin has managed to transcend the barriers of traditional finance to make real-world applications thanks to the approval of spot Bitcoin ETFs this year. While many critics say Bitcoin mining still poses threats to the environment, CleanSpark has been pioneering a path toward more sustainable solutions. Already, for example, its mining operations have been 90% powered by carbon-free power sources!
Shares of CLSK trade at about 9.2x sales and 30.8x forward earnings, in line with other major Bitcoin miners. With Bitcoin potentially targeting $100,000 this year, Cleanspark offers investors a cheap, and environmentally friendly way to jump in on this hot crypto bull rally.
Magnite (MGNI)
Magnite (NASDAQ:MGNI) is a sell-side advertisement tech platform that joined the Russell 2000 in 2022. According to Wall Street price targets, the stock is currently heavily undervalued. The lowest price target for MGNI is $13.00 which still represents a 10% upside. Additionally, its highest price target of $20.00 offers more than a 60% upside compared to today’s price.
The most recent quarter proved to be beneficial for Magnite as the company topped revenue estimates and saw its stock gain more than 10%. But that wasn’t the only catalyst for Magnite. The company announced an exclusive partnership with Netflix (NASDAQ:NFLX) as the only sell-side ad company. Analysts expect Netflix to become Magnite’s biggest customer by the end of 2025.
It hasn’t been an easy couple of years for MGNI shareholders. Luckily, the depressed price has presented a discounted buying opportunity at just 2.5x sales and 11x forward earnings. This, of course, has been accompanied by a strong 37% revenue compound annual growth rate! As Netflix comes on board in mid-2025, investors should look to buy this company before its growth balloons.
On the date of publication, Ian Hartana and Vayun Chugh did not hold (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.
