(This is the third in a three-part series listing highly rated stocks that sell-side analysts expect to rise the most over the next 12 months. Part 1 covers large-cap stocks, and part 2 covers mid-cap stocks.)
Small-cap stocks are always an exciting part of the market.
For newer companies, management teams are motivated to grow their businesses rapidly, which means greater opportunity — and more volatility. As the U.S. economy continues to chug along, with transformations in energy and so many tech-related industries, exposure to this sector is critical for a diversified long-term growth portfolio.
So how have the small-caps performed? As we saw in part 2 of this series, “winners” among the large-cap S&P 500 SPX, +0.29%, the S&P 400 Mid Cap Index MID, +0.16% and the S&P Small Cap 600 Index SML, -0.01% vary over time. Here’s a comparison of total returns (with dividends reinvested) for the indexes over various periods through Dec. 9:
| Index | 2019 | 3 years | 5 years | 10 years | 15 years | 20 years |
| S&P 500 | 28% | 47% | 69% | 252% | 260% | 228% |
| S&P Mid Cap 400 | 23% | 25% | 51% | 237% | 293% | 536% |
| S&P Small Cap 600 | 20% | 22% | 56% | 261% | 279% | 577% |
| Source: FactSet | ||||||
In recent years, the S&P 500 — heavily weighted to the largest U.S. tech companies — has been the leader. But small-caps are in the lead for 10- and 20-year returns.
There are many ways to play small-caps as a group, including low-cost index funds, such as the iShares Core S&P Small-Cap ETF IJR, +0.01%.
Wall Street’s favorites among the S&P 600
Here are the 20 S&P Small Cap 600 stocks covered by at least five sell-side analysts with 75% or more “buy” or equivalent ratings that have the highest 12-month upside potential implied by consensus price targets:
| Company | Ticker | Share 'buy' ratings | Share neutral ratings | Share 'sell' ratings | Closing price - Dec. 9 | Consensus price target | Implied 12-month upside potential | Total return - 2019 through Dec. 9 |
| Tetra Technologies Inc. | TTI, +3.25% | 78% | 22% | 0% | $1.26 | $3.19 | 153% | -25% |
| Cytokinetics Inc. | CYTK, +0.21% | 83% | 17% | 0% | $9.63 | $22.00 | 128% | 52% |
| Spectrum Pharmaceuticals Inc. | SPPI, -3.38% | 100% | 0% | 0% | $10.29 | $23.20 | 125% | 18% |
| Ring Energy Inc. | REI, +2.70% | 75% | 25% | 0% | $2.05 | $4.16 | 103% | -60% |
| PDC Energy Inc. | PDCE, -1.36% | 82% | 18% | 0% | $23.28 | $43.44 | 87% | -22% |
| Tabula Rasa Healthcare Inc. | TRHC, -2.59% | 78% | 22% | 0% | $40.38 | $74.14 | 84% | -37% |
| Callon Petroleum Co. | CPE, -0.70% | 87% | 13% | 0% | $4.26 | $7.70 | 81% | -34% |
| Regenxbio Inc. | RGNX, -3.09% | 83% | 17% | 0% | $42.71 | $75.67 | 77% | 2% |
| Chart Industries Inc. | GTLS, +2.38% | 92% | 8% | 0% | $55.99 | $91.75 | 64% | -14% |
| Renewable Energy Group Inc. | REGI, -2.13% | 100% | 0% | 0% | $18.18 | $28.80 | 58% | -29% |
| Consol Energy Inc. | CEIX, +0.07% | 80% | 20% | 0% | $13.34 | $21.00 | 57% | -58% |
| Archrock Inc. | AROC, -1.63% | 83% | 17% | 0% | $8.93 | $13.92 | 56% | 26% |
| Enova International Inc. | ENVA, -1.21% | 100% | 0% | 0% | $23.30 | $36.20 | 55% | 20% |
| Children's Place Inc. | PLCE, -23.14% | 75% | 25% | 0% | $69.90 | $107.63 | 54% | -21% |
| Tivity Health Inc. | TVTY, +2.43% | 100% | 0% | 0% | $20.23 | $31.14 | 54% | -18% |
| OneSpan Inc. | OSPN, -2.98% | 80% | 20% | 0% | $17.14 | $24.40 | 42% | 32% |
| CryoLife Inc. | CRY, +5.26% | 100% | 0% | 0% | $24.21 | $34.33 | 42% | -15% |
| Green Plains Inc. | GPRE, -0.50% | 80% | 20% | 0% | $14.22 | $20.00 | 41% | 10% |
| Newpark Resources Inc. | NR, +0.09% | 83% | 17% | 0% | $5.80 | $7.80 | 34% | -16% |
| Talos Energy Inc. | TALO, +5.15% | 100% | 0% | 0% | $25.42 | $34.17 | 34% | 56% |
| Source: FactSet | ||||||||
You can click on the tickers for more about each company.
Of 20 stocks on the list, 12 have suffered double-digit declines this year. It is not unusual to see this sort of action among a group of highly rated stocks with high price targets. It follows the trend for large-cap and mid-cap stocks. Mark Hulbert explained that the worst stocks in a given year tend to rebound the following year.
Don’t miss: These are the 20 best-performing stocks of the past decade, and some of them will surprise you
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