By Jeff Reeves, MarketWatch
Momentum investors love this flavor of consumer growth small-cap with a great story and big numbers to back it up.
• 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.
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.
•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.
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.
•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 .
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.
•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.
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.
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.