Market strategist Matt Orton has identified two under-the-radar U.S. small-cap companies that he believes have significant potential for growth.
What Happened: Orton, who serves as the chief market strategist at Raymond James Investment Management, expressed his optimism about small-cap stocks in 2024. He believes that these stocks are on the verge of a significant breakthrough, reported CNBC from an interview on “Squawk Box Asia."
"I have been optimistic around small-caps this year, and it looks like we could be on the verge of an even bigger breakout," Orton said.
Despite a challenging start to the year, the Russell 2000, the small-cap stock benchmark, has seen a 5.2% increase year-to-date. Orton pointed out that the index is still over 13% off its all-time high from 2021.
Orton highlighted two U.S. small-cap companies, Vertiv Holdings Co VRT and Cyberark Software Ltd CYBR, as particularly appealing investment opportunities.
Vertiv Holdings, a provider of cooling equipment and power management products for data centers, is expected to experience an increase in demand as more high-heat generating chips enter the market. Despite a 471% increase in its stock over the past 12 months, Orton remains confident in the company’s potential for growth.
Meanwhile, CyberArk, an information security company, is seen as a strong player in the cybersecurity sector. Orton believes that as AI continues to develop, there will be a rise in cyber threats and attacks, creating opportunities for companies like CyberArk. The company’s stock has seen an 80% increase over the past year.
Why It Matters: Orton’s picks come at a time when the stock market is experiencing a mix of optimism and caution. The first quarter of 2024 saw a robust performance, with experts predicting a potentially “frightful yet fulfilling” year-end. This has led to various predictions and warnings, such as that of JPMorgan’s chief global equity strategist, Dubravko Lakos-Bujas, who warned of a potential “out-of-the-blue” stock market shock.
On the other hand, Goldman Sachs has predicted a 15% upside for the S&P 500, driven by the exceptional performance of mega-cap tech stocks. Against this backdrop, Orton’s focus on under-the-radar small-cap companies suggests a nuanced approach to navigating the current market conditions.
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