Every investor should pay attention to Russell 2000 stocks with strong buy ratings. These stocks tend to have lower valuations compared to the highly-priced large-cap stocks in the FAANG group and the Nasdaq composite.
After the strong bull run in the tech sector over the past several years, many investors are concerned about the high valuations of the major tech giants. In contrast, small-cap stocks in the Russell 2000 index often fly under the radar and can provide attractive opportunities for investors seeking undervalued companies with growth potential.
Small-cap companies have more room for growth as they are earlier in their life cycle than large, mature corporations. This can translate into higher revenue and earnings growth rates.
Here are three Russell 2000 stocks that have caught the attention of Wall Street analysts and investors with strong buy ratings.
Lantheus Holdings (LNTH)
Lantheus Holdings (NASDAQ:LNTH) is a global biopharma technology platform that focuses on enzymes and medical devices.
LNTH reported a strong performance for 2023, with total revenues reaching $1.3 billion, representing a 39% year-over-year growth. Its products, PYLARIFY and DEFINITY, primarily drove this increase of year-over-year growth of 61% and 14%, respectively.
LNTH also highlighted advancements across its radiopharmaceutical pipeline, including positive Phase 3 results for PNT2002 in treating metastatic castration-resistant prostate cancer. Looking ahead, LNTH has filed an abbreviated new drug application for PNT2003 to treat neuroendocrine tumors.
For 2024, analysts have set a moderate buy consensus for LNTH, with a price target of $82 to $127 and an average target of $104.14. This suggests a potential upside of approximately 74.3% from its current price.
Biopharma stocks like LNTH can be a great way to diversify one’s portfolio, but it’s important to note that investing in companies like these can lead to polarizing, “all or nothing” results, and one should expect significant volatility along the way there.
Chart Industries (GTLS)
Chart Industries (NYSE:GTLS) operates in the energy and industrial gas sectors.
For 2024, GTLS has laid out a robust financial outlook, anticipating significant growth across its operations. The company forecasts sales to rise by 28% to 37% and expects adjusted EBITDA to grow by 52% to 68.
Meanwhile, GTLS ended 2023 on a strong note, with $130 million generated from operations in Q4, alongside significant debt reduction efforts that saw its net leverage ratio improve markedly from 4.08 in Q1 to 3.35 by year-end. This is part of a broader strategy to achieve a mid-2024 net leverage ratio target of 2.5 to 2.9, aiming for a range of 2 to 2.5 eventually.
The energy sector is rife with opportunity. Global instabilities with the Russia and Israel/Hamas war are expected to continue. Small companies like GLTS could significantly appreciate value in the short term, making them one of those Russell 2000 stocks for investors to consider.
Atkore (ATKR)
Atkore (NYSE:ATKR) specializes in electrical, safety and infrastructure products.
ATKR is one of my contrarian picks from the bunch. It recently experienced a decrease in net sales by 4.2% in Q1 2024 compared to the same period in the previous year, totaling $798.5 million. This decrease is primarily attributed to lowered average selling prices across the company’s products and the economic value of solar tax credits transferred to certain customers.
Looking forward, Atkore projects revenue growth at an average of 3.7% per annum over the next three years, slightly lower than the 7.8% growth forecast for the US electrical industry. Despite a week-over-week share price decline of 3.6%, analysis suggests Atkore could potentially be undervalued.
Its P/E ratio of around nine times earnings is far lower than its peers, and its near-term visibility for sales and earnings could give it some much-needed stability, thus improving it on a risk-adjusted basis.
All in all, it’s one of the Russell 2000 stocks investors should consider buying.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.