6 Stocks Being Added to the Russell Indexes That Are on My Radar
These small-cap names will see a surge in volume later this week but are also fundamentally strong.
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After two days of relative weakness in big-cap technology, investors are rotating back into the Magnificent Seven names. All seven stocks are in positive territory, and the gloomy action in Nvidia NVDA was suddenly forgotten.
Of course, when the big-cap technology names are leading, the rest of the market will suffer. Breadth is running 3,300 gainers to 5,500 decliners, and there are more stocks at 12-month lows than highs. The Russell 2000 and DJIA are down around 0.3%, while the Nasdaq 100 QQQ is up about 0.7%.
This choppy and inconsistent rotational action is nothing new, but it makes trading much more difficult. There are plenty of names on my radar that should perform well if we ever see sustained interest in small-caps.
This Friday, the Russell indexes will be reconstituted. There are about 200 stocks that will join the Russell 3000. Some of them are likely to see unusual action as brokers locate shares that will be transferred to index ETFs and funds after the market close on Friday. Large blocks will cross at the close.
I’ve reviewed the stocks that are on the list of potential additions to the Russell 3000, and these are more favorites:
1. Hut 8 HUT and Core Scientific CORZ. Both these names are bitcoin miners, but they gained attention recently because the technology that is used for bitcoin mining can also be used for AI applications. Both companies already have large data centers and are entering into agreements with AI firms that need more processing power.
2. Dutch Bros BROS operates 830 drive-through coffee shops in 16 states. The company recently made an offering in the $39.50 to $39.88 range, which is providing strong support for a good-looking chart. This is one of the better technical setups in this group of stocks.
3. American Superconductor AMSC. AMSC more than doubled off its April low following solid earnings. It is now consolidating and looking for support. Recent contract news with Irving Shipbuilding for its ship protection system is helping to drive the stock.
4. LifeMD LFMD. The company has a strong telemedicine business with a nice focus on obesity drugs. It announced Tuesday that it is offering an insurance process and should have Medicare coverage next year. The stock has dropped sharply but should have support in the high $6’s.
5. Despegar.com DESP is an Argentinian online travel service with 2.5 million customers in Latin America. It is expected to earn $0.96 in 2024 and $1.21 in 2025. It has pulled back following its last earnings and is filling a gap on the chart.
All six of these stocks are likely to see unusual trading volume on Friday when the Russell indexes are adjusted, but they all have favorable fundamentals that may help them gain upside momentum after the volatility subsides.
At the time of publication, Rev Shark was long HUT, CORZ, LFMD and DESP.
