Top 5 Small Caps That Are Flying High and Defying the Omicron-Led Agitation – December 6, 2021

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Wall Street has suffered from extreme volatility since Black Friday, when news of a new variant of the coronavirus – Omicron – hit global financial markets. All major stock market indices suffered from regular market fluctuations. Small-cap stocks suffered the most, however, as Omicron’s rapid spread is likely to hit small companies hard.

Nonetheless, despite high volatility over the past six trading sessions, a few small cap stocks have sprung up defying the downtrend in the market. Investing in such stocks with a favorable Zacks ranking is expected to generate returns in the future. We have selected five of these actions. These are: Build-A-Bear Workshop Inc. (BBW Free report), REX American Resources Corp. (REX Free report), Medallion Financial Corp. (MFIN Free report), First Community Corp. (FCCO Free report) and Sensus Health Inc. (SRTS Free report).

Small caps suffer the most

Small-cap stocks suffered the most during the 2020 pandemic. Given the small scale of their operations, these companies are typically cash-strapped. These businesses operate with a low profit margin and most new businesses will take a long time to achieve profitability. In addition, these organizations; have virtually no geographic diversification and depend on American consumers.

Therefore, the normal functioning of the US economy is essential for small businesses. These companies survived 2020 thanks to unprecedented fiscal and monetary stimulus from the US government and the Fed. Therefore, the recent statement by Fed Chairman Jerome Powell that hints at the possibility of the central bank completing the reduction in the quantitative easing program more quickly than expected does not bode well for these companies.

Small businesses depend on easy access to cheaper credit. A higher interest rate will hurt their growth. As a result, any disruption to the normal functioning of the U.S. economy due to the resurgence of COVID-19 and increased interest can significantly affect small businesses.

From November 25 to December 3, specific large-cap indices – the Dow, S&P 500 and Nasdaq Composite – fell 3.4%, 3.5% and 4.8%, respectively. The mid-cap specific S&P 500 slipped 5.9%. The Russell 2000 and S&P 600, which focused on small caps, lost 7.4% and 6.1%, respectively. The Russell 2000 is currently in correction territory, trading 12.2% below its all-time high of 2,458.86 on November 8th.

Importance of small businesses

Small businesses create a significant number of jobs in the US economy. More than 50% of newly created jobs in the private sector come from these companies. These people, working in small-scale organizations, make up a large portion of the clients of large US corporations.

Additionally, small businesses are an important part of large business supply chain management systems for innovative and technologically superior inputs. In addition, small businesses more often than not form a critical cog in US business customers.

Our top picks

We narrowed down our search to five small-cap stocks (market capital

These stocks have solid growth potential for the remainder of the month and have seen positive earnings estimate revisions over the past 30 days. Finally, each of our choices carries either a Zacks Rank # 1 (Strong Buy) or 2 (Buy). You can see The full list of today’s Zacks # 1 Rank stocks here.

The chart below shows the price performance of our five picks from November 25 through December 3.

Image source: Zacks Investment Research

Sensus Health Inc. manufactures, distributes and markets surface radiation therapy devices to healthcare providers around the world. Sensus Healthcare specializes in the treatment of skin cancers other than melanoma and other skin conditions, such as keloids, with superficial radiation therapy. The SRTS therapy device portfolio consists of the SRT-100 (TM) and SRT-100 Vision (TM).

Zacks Rank # 1 Sensus Healthcare has forecast profit growth of 95.2% for the current year. Zacks’ consensus estimate for current year earnings has improved by over 100% in the past 30 days. The SRTS share price jumped 13.3% from November 25 to December 3.

Build-A-Bear Workshop Inc. operates as a multi-channel retailer of stuffed animals and related products. Build-A-Bear Workshop operates through three segments: Direct-to-Consumer, International Franchising and Commercial. BBW operates its stores under the Build-A-Bear Workshop brand and sells products through its e-commerce sites.

Zacks Rank # 1 Build-A-Bear Workshop expects earnings growth of over 100% for the current year (ending January 2022). Zacks’ consensus estimate for current year earnings has improved 26.7% in the past 7 days. The BBW share price climbed 12.8% from November 25 to December 3.

REX American Resources Corp. produces and sells ethanol in the United States. REX American Resources operates in two segments: ethanol and its by-products and refined coal. REX also offers non-food distillers ‘grains and corn oil and dry distillers’ grains with solubles, which are used as protein in animal feed. In addition, REX produces, processes and sells refined coal.

Zacks Rank # 1 REX American Resources has forecast earnings growth of over 100% for the current year (ending January 2022). Zacks’ consensus estimate for current year earnings has improved 15.2% in the past 7 days. The REX share price appreciated 8.5% from November 25 to December 3.

Medallion Financial Corp. is a specialty finance company that creates and manages loans to fund taxi medallions and various commercial loans in the United States. MFIN offers consumer loans for the purchase of recreational vehicles, boats, motorcycles and trailers and to finance home renovations; business loans for the purchase of equipment and related assets required to open a new business.

Zacks Rank # 2 Medallion Financial has forecast earnings growth of over 100% for the current year. Zacks’ consensus estimate for current year earnings has improved 6.3% in the past 30 days. The MFIN share price rose 7.1% from November 25 to December 3.

First Community Corp. operates as a banking holding company for First Community Bank, which provides a variety of commercial and retail banking products and services to small and medium-sized businesses, professionals and individuals. FCCO operates in commercial and retail banking, mortgage banking, and investment advisory and no deposit advisory services.

Zacks Rank # 2 First Community predicts 49.6% profit growth for the current year. Zacks’ consensus estimate for current year earnings has improved 5.9% in the past 30 days. The FCCO share price rose 5.3% from November 25 to December 3.


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