The Russell 2000 is a benchmark index representing small-cap stocks. Its holdings are in a wide range of industries, including financials, industrials, information technology, healthcare and consumer discretionary.
The Russell 2000 also recently underwent its annual rebalancing in late June. This allows for a number of new stocks to be added and stocks that no longer fit the index’s criteria to be dropped.
Below, I discuss three stocks included in the Russell 2000 Index that are strong buys for investors, especially following a dip in the market recently due to overall uncertainty surrounding future economic conditions.
SkyWest (SKYW)
SkyWest (NASDAQ:SKYW) is a regional airline that provides cargo and passenger transport services. It also offers aircraft leasing and chartering.
SkyWest reported earnings for the first quarter on April 25. Total revenue increased by 16% compared to the year before. A net loss of $22 million was reported for Q1 2023, and for Q1 2024, it improved to a net income of $60 million due primarily to an increase in overall travel demand.
SkyWest did beat analyst predictions regarding earnings for the first quarter, and investors will be watching closely for its results for the second quarter, which will most likely be released on July 25.
SkyWest is a strong outlier among airline stocks at this time. Its share price has increased more than doubled within this last year while other airline stocks such as American Airlines (NASDAQ:AAL), Southwest Airlines (NYSE:LUV) and United Airlines (NASDAQ:UAL) have all experienced a drop in share price by 37%, 26% and 14%, respectively.
Airfares are continuing to fall during these busy summer travel months. In June, fares fell by 5% year-over-year, which may continue to attract new and recurring customers to SkyWest.
Sprouts Farmers Market (SFM)
Sprouts Farmers Market (NASDAQ:SFM) is a food retailer that offers a wide range of organic and fresh food options for its customers. Its products include dairy, meats, seafood perishable items, bulk items and beverages.
Over the last year, its share price has more than doubled due to solid earnings results, new store openings, and a new share buyback program.
On May 1, Sprouts Farmers Market reported earnings for the first quarter of 2024, where it stated that total revenue increased by 9% and net income rose by 50% compared to the year before. It also opened seven new stores during this quarter.
On May 23, SFM announced an update to its share buyback program. The new program, totaling $600 million in share repurchases, replaces its previous program, which still had approximately $120 million left. The new program could last until May 2027.
Sprouts is a strong buy stock that could continue to see impressive growth. Its next earnings report for the second quarter of 2024 will be released on July 29.
Modine Manufacturing (MOD)
Modine Manufacturing (NYSE:MOD) is a company that produces thermal management equipment. Its products include heat recovery coils, modular chillers, unit ventilators, fluid coolers, heat exchangers, and condensing units.
On May 21, MOD reported earnings for the fourth quarter of fiscal year 2024, stating that total sales decreased by 2% while its gross profit increased by 21% year-over-year. Its outlook for the fiscal year 2025 anticipates a 5% to 10% increase in total revenue.
Modine continues to grow its overall portfolio. It recently launched an expanded thermal management product line of cabin climate systems, primarily for use in EVs.
Modine Manufacturing’s share price has increased rapidly over this past year, more than tripling, offering investors a solid investment opportunity. MOD also plans to report earnings results for the first quarter of fiscal year 2025 on July 31.
As of this writing, Noah Bolton 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.
