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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 +1.43%  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 7.78, +0.11, +1.43%

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 -2.54%  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 16.61, +0.08, +0.48%

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 +0.31%  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 94.14, +0.29, +0.31%

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 -0.09%  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 31.62, -0.03, -0.09%

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 -3.02%  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 20.52, -0.64, -3.02%

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
$ 7.78
+0.11 +1.43%
Volume: 418,700
Aug. 6, 2020 4:00p
P/E Ratio
23.95
Dividend Yield
N/A
Market Cap
$560.35 million
Rev. per Employee
$388,632
loading...
/zigman2/quotes/202654199/composite
US : U.S.: Nasdaq
$ 8.07
-0.21 -2.54%
Volume: 9.47M
Aug. 6, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$1.38 billion
Rev. per Employee
$556,238
loading...
/zigman2/quotes/200022359/composite
US : U.S.: Nasdaq
$ 94.14
+0.29 +0.31%
Volume: 7.69M
Aug. 6, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$3.79 billion
Rev. per Employee
$884,268
loading...
/zigman2/quotes/203606847/composite
US : U.S.: Nasdaq
$ 31.62
-0.03 -0.09%
Volume: 664,318
Aug. 6, 2020 4:00p
P/E Ratio
22.37
Dividend Yield
3.54%
Market Cap
$638.27 million
Rev. per Employee
$1.53M
loading...
/zigman2/quotes/202981234/composite
US : U.S.: NYSE
$ 20.52
-0.64 -3.02%
Volume: 431,645
Aug. 6, 2020 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$1.16 billion
Rev. per Employee
$1.43M
loading...

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

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