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May 21, 2020, 8:09 a.m. EDT

Ride the momentum with these 9 surging small-cap stocks

These stocks range from flowers to games to a provider of aviation services

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By Jeff Reeves, MarketWatch

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Momentum investors love this flavor of consumer growth small-cap with a great story and big numbers to back it up.

Consolidated Communications

• Sector: Telecommunications

• YTD return: 38%

Small-fry telecom Consolidated Communications Holdings /zigman2/quotes/209212218/composite CNSL +0.71%  was mostly shunned by Wall Street over the last few years, as it barely operated in the black and boasted a small and stagnant business. However, its multiyear slide changed in a hurry as its rather modest portfolio of about 800,000 internet connections became quite valuable in the era of coronavirus.

/zigman2/quotes/209212218/composite CNSL 5.66, +0.04, +0.71%

Beyond the short-term lift of current customers using more bandwidth, the company promoted some shrewd partnerships with small school districts to help win much-needed attention from new customers and investors.

Predictions are now for a relatively impressive 26 cents in earnings per share in 2020 compared with just 2 cents a year earlier.

Glu Mobile

•Sector: Technology

•YTD return: 60%

You or your kids may have become rather loyal Glu Mobile /zigman2/quotes/202654199/composite GLUU +1.47%  customers in the past several weeks as coronavirus quarantines have prompted many to download time-killing games to their phones. Glu titles include cooking games, fashion games, sports games and even licensed titles with stars including Kim Kardashian and celebrity chef Gordon Ramsay.

/zigman2/quotes/208078352/composite GLU 18.68, +0.14, +0.73%

The stock was already riding a strong history of earnings surprises before this outside trend boosted numbers — and if shut-in gamers stick with some of these titles, the growth trend may stick at the company too.

Overstock

•Sector: Consumer discretionary

•YTD return: 150%

Yes, Overstock.com /zigman2/quotes/200022359/composite OSTK -3.19%  has given plenty of investors whiplash in recent years. A few years ago, it billed itself as a blockchain company and saw shares surge from around $15 to more than $60 by early 2018. Then it cratered in part because of the antics of its controversial founder and CEO .

/zigman2/quotes/200022359/composite OSTK 60.93, -2.01, -3.19%

Now material growth in its core e-commerce business is in focus again and investors like what they see — but more fireworks may loom as the company prepares a controversial “ digital dividend ” of preferred shares. So far volatility has moved in the right direction for shareholders, however, so this high-octane small-cap remains noteworthy.

PetMed

•Sector: Health care

•YTD return: 40%

The industry designation of “health care” may be a tad misleading here, as PetMed Express /zigman2/quotes/203606847/composite PETS -1.85%  caters to pet owners looking to order treatments for heartworm as well as common items like cat food, doggy beds and those absurd pet strollers to take critters for a walk without … you know, them actually walking.

/zigman2/quotes/203606847/composite PETS 29.77, -0.56, -1.85%

This stock is at the intersection of some powerful trends, as coronavirus fuels both e-commerce shopping and the need for pet companionship. Throw in the fact that pet spending is approaching $100 billion annually in the U.S. , and it’s easy to see the appeal of this smaller and specialized retailer.

United Natural Foods

Sector: Consumer staples

YTD return: 111%

One of the more recent breakouts on this list, United Natural Foods /zigman2/quotes/202981234/composite UNFI +2.92%  is a grocery distributor with a special focus on natural, organic and healthy products. Organics represent only about 6% of U.S. food sales at present, but that’s good for about $50 billion and steadily growing.

/zigman2/quotes/202981234/composite UNFI 23.60, +0.67, +2.92%

The short-term boost for in-home foods given by restaurant closures has created a tailwind for this small-cap stock. Throw in a massive first-quarter earnings beat and raised guidance this month, and shares have surged from under $11 at the start of May to more than $18 at present.

Jeff Reeves writes about investing for MarketWatch. He doesn’t own any of the stocks mentioned in this article.

/zigman2/quotes/209212218/composite
US : U.S.: Nasdaq
$ 5.66
+0.04 +0.71%
Volume: 357,752
Jan. 20, 2021 4:00p
P/E Ratio
10.89
Dividend Yield
N/A
Market Cap
$446.29 million
Rev. per Employee
$393,101
loading...
/zigman2/quotes/202654199/composite
US : U.S.: Nasdaq
$ 9.67
+0.14 +1.47%
Volume: 2.86M
Jan. 20, 2021 4:00p
P/E Ratio
292.15
Dividend Yield
N/A
Market Cap
$1.64 billion
Rev. per Employee
$575,358
loading...
/zigman2/quotes/200022359/composite
US : U.S.: Nasdaq
$ 60.93
-2.01 -3.19%
Volume: 1.84M
Jan. 20, 2021 4:00p
P/E Ratio
296.21
Dividend Yield
N/A
Market Cap
$2.69 billion
Rev. per Employee
$904,785
loading...
/zigman2/quotes/203606847/composite
US : U.S.: Nasdaq
$ 29.77
-0.56 -1.85%
Volume: 1.81M
Jan. 20, 2021 4:00p
P/E Ratio
19.41
Dividend Yield
3.76%
Market Cap
$614.85 million
Rev. per Employee
$1.33M
loading...
/zigman2/quotes/202981234/composite
US : U.S.: NYSE
$ 23.60
+0.67 +2.92%
Volume: 1.73M
Jan. 20, 2021 4:00p
P/E Ratio
12.43
Dividend Yield
N/A
Market Cap
$1.29 billion
Rev. per Employee
$936,900
loading...

Jeff Reeves is a stock analyst who has been writing for MarketWatch since 2010.

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