The Russell 2000 index tracks the performance of small-to-mid capitalization stocks. If anyone has been watching this captivating index, they would have seen a stark divergence between small-to-mid-cap and large-cap returns. As an example, the Russell 2000 rose 5.2% in the first quarter, yet the S&P500 and the tech-heavy Nasdaq Composite had rallied 10.2% and 9.1%, respectively.
The onset of the second quarter marked a negative shift in broader U.S. equities returns as a result of a higher-than-expected March consumer price index (CPI) report as well as concerns surrounding the fundamentals (or lack thereof) of the ongoing market rally. The Russell 2000 ended up taking a significant hit at the beginning of the second quarter, most likely due to investors pulling their capital out of what they saw as smaller, riskier equities and pouring capital into stable larger caps.
On a year-to-date basis, the Russell has started to catch up with its peer indices, up 8.6% for the year, but there is still plenty of room for investors to take advantage of the performance gap. In particular, below are 3 Russell 2000 stocks trading at 52-week lows.
Helen of Troy (HELE)
Helen of Troy (NASDAQ:HELE) is a seller of various consumer goods. The company primarily operates in two segments: Home & Outdoor and Beauty & Wellness. That is, everything from kitchenware to baking essentials, bath and cleaning products, infant and toddler products as well as outdoor and sports accessories. In essence, Helen of Troy’s bread and butter is household durables, which should be a stable source of income for a business, if we’re in a solid macroeconomic environment. Since 2022, inflation and interest rates have been hitting the pocketbooks of American consumers. This has translated to many exploring budget options in terms of their consumer spending.
In turn, Helen of Troy’s past couple of fiscal years have seen sales decline year-over-year. The consumer durable firm’s fiscal year 2024 (ended in February) registered just over $2 billion in revenue, representing a 3.3% decline from fiscal year 2023. Because inflation is coming down, Helen of Troy could be a good bet again as its volume picks back up. The company’s shares hit a 52-week low of $56.75 last Friday and currently trade at a pretty compelling 7.8x forward earnings.
Omnicell (OMCL)
The next Russell stock on the list to reach a 52-week low is a company called Omnicell (NASDAQ:OMCL). Omnicell provides pharmaceutical management automation services to healthcare providers. A key product for the healthcare firm has been the XT Series automated dispensing systems, which is an automated dispensary product for medications and supplies for various clinical areas and departments of the hospital. Omnicell also provides “Point of Care Services” that leverage data to deploy efficiencies in clinician workflows. Omnicell also has a specialty pharmacy that is trying to improve access to limited drugs.
Unfortunately, labor constraints and crippled healthcare budgets have led to lower volumes for Omnicell’s products. Revenue declined nearly 12% in fiscal year 2023, and much of the decline was related to losses in product revenue.
Again, the macroeconomic environment is not all gloomy, and there are silver linings that point to durable, long-term growth in the economy. In mid-July, OMCL hit a 52-week low, opening an opportunity for investors interested in betting on a solid healthcare platform.
First Watch Restaurant Group (FWRG)
Based in Florida, First Watch Restaurant Group (NASDAQ:FWRG) is a daytime dining chain restaurant that had about 524 restaurants across 29 states at the end of fiscal year 2024, 99 of which were franchise-owned while First Watch fully owns the remaining. Solid double-digit growth has helped First Watch’s share price to grow in recent years.
However, the company has also struggled with a difficult macroeconomic environment. Restaurant volumes, for example, in the first quarter of fiscal year 2024, have declined, largely due to consumers pulling back from particular acts of discretionary spending. Inflation is coming down, yet it remains elevated. First Watch has also had to deal with labor shortages, which have added to turnover. Moreover, the restaurant chain’s net income also saw a quarterly decline of $2.2 million from the first quarter of fiscal year 2023.
Long-term investors might appreciate First Watch’s shares, however. Boasting a trading multiple of 1.4x forward sales and trading near its 52-week low, First Watch could turn out to be a lucrative investment among Russell 2000 stocks.
On the date of publication, Tyrik Torres 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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
