Investors Rush To Buy 7 Small Stocks Before Everyone Else Does

Tired of the giant Magnificent Seven S&P 500 stocks, yet? Some investors are scrambling to pick up some small-cap stocks left between the cracks.




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Seven stocks in the S&P SmallCap 600 index, including industrial Kaman (KAMN) and consumer discretionary stocks Shake Shack (SHAK) and Abercrombie & Fitch (ANF), surged 35% or more this year already, says an Investor’s Business Daily analysis of data from S&P Global Market Intelligence and MarketSurge. That’s well above the S&P 500’s 7.8% gain this year so far.

And that’s just the start. “Could attractive valuations provide a catalyst for growth among small-cap and midcap stocks and serve as a fourth bullish factor? Some fund managers say yes,” said Robert Maltbie, president of Santa Monica, Calif.-based small-cap research firm Singular Research.

Time For Small Caps To Top The S&P?

Gains from small caps are a bit overdue. The SPDR Portfolio S&P 600 Small Cap ETF (SPSM) gained just 14.1% last year, while the S&P 500 added 24.3%. And this year, despite some huge winners, the Small Cap index is down 0.4% this year.

Small caps have been ignored for so long, though, they’re creating some interesting opportunities, Maltbie says. He points out the total market valuation of the entire small-cap Russell 2000 index is less than the multitrillion-dollar values awarded to a few of the Magnificent Seven tech giants.

And that’s the opportunity — as some investors are figuring out.

Big Gains In Small Stocks

If you’re looking for a giant gain in a small stock, look no further than Kaman. The $1.3 billion company makes all sorts of aircraft parts. Shares are up more than 90% this year, outperforming all other S&P 600 stocks and most S&P 500 ones.

Don’t think it’s just speculation, either. The company’s profit is expected to rise more than 71% this year to 84 cents a share. And in 2025, analysts are calling for another 61.9% jump in profits.

Finding Wins In Consumer Discretionary

Some consumers like to complain things are tough “in this economy,” but they’re not spending that way. Shares of burger maker $4.1 billion Shake Shack are up more than 40% this year. The company’s profit this year is seen rising nearly 38%. Additionally, profit at the company is expected to lift another 38% in 2025.

Another small consumer stock is also rallying. Abercrombie & Fitch, an apparel retailer worth $6.5 billion, has seen its shares rally more than 35% this year. That’s coming off a 285% stock gain in 2023. The company is goosing sales by selling to older adults, not just teens. The company’s profit is seen jumping more than 22% this year.

Just a few standouts doesn’t make a broad small-cap rally. But if these leaders are any indication, they show there’s more to making money in the market than just giant S&P 500 stocks.

Big Gains From Small Stocks

Top gainers this year in S&P SmallCap 600 index

Company Name Ticker YTD % ch. sector
Kaman (KAMN) 90.9% Industrials
Powell Industries (POWL) 70.5% Industrials
AdaptHealth (AHCO) 51.0% Health Care
Shake Shack (SHAK) 40.1% Consumer Discretionary
Ultra Clean Holdings (UCTT) 36.3% Information Technology
Abercrombie & Fitch (ANF) 35.5% Consumer Discretionary
DXP Enterprises (DXPE) 35.3% Industrials
Sources: S&P Global Market Intelligence, IBD