In 2023, the tech sector experienced a significant surge in the stock market marked by the strong performance of major technology companies like Microsoft, Amazon, and Alphabet.
As we move into 2024, there's growing optimism that inflation pressures are diminishing, potentially leading to a halt in the rate hikes by global central banks. This positive outlook is further bolstered by projections from analysts, who anticipate that in 2024, the earnings growth of small-cap companies will outpace that of large-cap companies across most regions.
Small-Cap Stocks for Big Gains
Small-cap stocks are an appealing choice for early-stage investors due to their typically lower per-share cost compared to large-cap stocks. These stocks are known for their higher volatility, which can lead to significant price fluctuations.
This characteristic makes them a double-edged sword: they offer potential for substantial gains, but also carry a greater risk of loss. Their market volatility often stems from smaller market capitalization and sensitivity to market dynamics, making them more susceptible to economic shifts.
This volatility aligns with the goals of some investors who seek rapid growth opportunities, albeit with increased risk exposure.
Stocks to Keep an Eye on in 2024
With a market value of around $9.6 billion, Bath & Body Works is a leading figure within the Body Care Retail industry. Analyst Lorraine Hutchinson of Bank of America expects the stock to rise by 13%, as the company recovers from sales losses and focuses on expanding its online presence.
Biopharma stock Amylyx Pharmaceuticals, despite a 60% plunge in 2023, could rally an impressive 173%, given the positive results of its ALS therapies and potential M&A activity.
Cybersecurity firm CyberArk, valued at nearly $10 billion, has already seen a surge of 69% in 2023. The company's stock has already increased by 7.8% in early 2024. Analyst Tal Liani predicts a further potential increase of around 10% for the stock as it capitalizes on the rising demand for privileged access management (PAM) solutions.
United Airlines, also highlighted as a key SMID pick for 2024, saw a modest 9.4% increase in 2023 and a further 2% rise early in 2024. The growth was somewhat hampered by the grounding of Boeing 737 Max 9s following a door panel incident in January.
However, the company's stock picked up following better-than-expected earnings and revenue in the fourth quarter. Analyst Andrew Didora predicts a 41% rise in United's stock value.
Also Look Out For
Other standouts include e-commerce retailer Wayfair, aircraft leasing company Air Lease Corporation, and chipmaker SK Hynix, which is expected to capitalize on the memory upcycle and strong demand for high-end memory semiconductors used in AI chipsets.
The trend of small and mid-cap stocks outperforming larger companies could continue in 2024, making these promising investments for investors looking for growth opportunities.
Despite a challenging market environment, the strategic moves and innovative technologies of these companies position them well to weather potential headwinds and deliver solid returns.
Investors may also consider investing in ETFs like the Franklin FTSE South Korea ETF or the iShares MSCI South Korea ETF for exposure to a diversified portfolio of small-cap Korean stocks.
Wrapping Up
In summary, 2024 could be a year of expansion and growth for these smaller stocks as they build on their strong fundamentals, strategic partnerships, and innovative technologies.
Investors should remain vigilant, closely monitoring market trends and company developments. These emerging stocks, while potentially lucrative, also carry inherent risks, making it crucial to evaluate them within a broader, diversified investment strategy. Keeping an eye on market shifts and technological advancements will be key in identifying opportunities and navigating the dynamic landscape of small-cap investments.