The S&P 500 tends to hog the spotlight, but the small-cap Russell 2000 stocks hold massive upside potential. Though not all Russell 2000 stocks are made equal, some will most certainly break through and offer outsized gains for their investors. Moreover, with the inflation and interest rates expected to cool off substantially in the coming months, now may be an opportune time to consider the top Russell 2000 stocks.
The Russell 2000 Index uniquely focuses on small-cap companies, representing 2000 stocks within the broader Russell 3000 Index. Their market caps usually fall between the $300 million to $2 billion range, offering a better gauge of the overall health of the U.S. economy. As a benchmark covering small-cap performance, it provides an excellent avenue for investors seeking diversification beyond large-cap stocks. Hence, the tremendous blend of risk and opportunity sets it apart when the focus is mostly on large-cap AI stocks.
Russell 2000 Stocks: LiveRamp (RAMP)
Shares of omnichannel advertising specialist LiveRamp (NYSE:RAMP) shot up an eye-catching 61% last year and are up 14% in the past six months. The company has positioned itself as a go-to platform enabling markers to deliver content across multiple devices and channels. The demand for omnichannel advertising has surged due to seamless shopping requirements and advanced technology, allowing more effective brand interaction at different touchpoints.
In catering to the omnichannel advertising needs, LiveRamp’s powerful identity resolution platform facilitates the targeting of consumers across several channels. Moreover, it allows for creating wide-ranging consumer profiles, boasting data from over 200 million users. Consequently, the company revenues have soared from $286 million in fiscal 2019 to $597 million in fiscal year 2023. During that same period, its free cash flow per share has risen an impressive 127% to $1.70. Recent results have shown that it’s not slowing down soon, with comfortable beats across both lines in the past three consecutive quarters. Unsurprisingly, Tiprank’s analysts assign a 42% upside for RAMP stock based on current prices.
Celsius (CELH)
It’s easy to get behind a stock such as Celsius (NASDAQ:CELH). After the S&P 500’s blow-out performance last year, Celsius stock crushed those returns with an explosive 221% gain. Year-to-date (YTD), CELH stock is up 67%, with Wall Street analysts firmly behind it.
It’s not hard to see why the sports beverage giant in the market went ga-ga over it last year. It smashed year-over-year (YOY) top-line comps in each of the four quarters last year, beating analyst estimates by comfortable margins. Surprisingly, it did so despite operating in a business environment marked by high inflation and macroeconomic weaknesses.
Much of it could be due to its producing healthier drinks than most of the competition, as noted by Marc Guberti, my fellow InvestorPlace contributor. He also notes that this distinction has helped the business become a major hit with the Gen Z demographic. Moreover, it wants to expand its presence in markets outside North America, which presents another long-term opportunity.
SoundHound AI (SOUN)
SoundHound AI (NASDAQ:SOUN) is a frontrunner in the conversational AI domain, catering to a variety of industries including automotive, customer support, IoT, and others. Known for its powerful voice assistant development platform in Houndify, the company expanded its offerings with SoundHound Chat AI. The AI-driven assistant efficiently leverages real-time information from multiple areas, delivering a dynamic experience for its user base.
Perhaps the biggest knock on SoundHood, despite the impressive top-line numbers, is its considerable customer concentration risk. Just two customers made up roughly 62% of its sales last year, which places it in a precarious spot. However, tech behemoth Nvidia’s (NASDAQ:NVDA) disclosure of it owning $3.7 million of SOUN shares has changed the narrative somewhat. Moreover, it attracts a ‘strong buy’ rating from Wall Street, adding to its current attractiveness.
On the date of publication, Muslim Farooque did not have (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