3 Small Caps I've Bought Amid Big Tech Rotation
These three small-cap names have reported solid second quarter results and seem poised for more.
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Investors have been treated to one of the sharpest divergences in recent memory over the past month as money has rotated out of Big Tech in a significant way. A lot of those freed up funds have found their way into small caps, with the Russell 2000 up by nearly 10% over the past month. This small-cap benchmark has vastly underperformed its larger brethren for years. Hopefully, this is just the start of a significant "catch up" phase. However, for that to happen, small-cap stocks are going to have to post solid second quarter results.
Here are three small cap names that already have cleared that bar:
Let’s start with biopharma Corcept Therapeutics CORT that disclosed its Q2 numbers on Monday. This small-cap company delivered an impressive quarter. Revenues rose just over 39% on a year-over-year basis to nearly $164 million, easily besting estimates. Earnings came in at 32 cents a share, beating the consensus by a dime per share. For good measure, management also bumped up its FY2024 sales guidance range by $20 million to $640 million to $670 million. At its midpoint, that range would represent 36% sales growth over FY2023. Based on recent trial results, leadership should submit a marketing application for its asset relacorilant to treat Cushing’s syndrome in the fourth quarter of this year. The company is already nicely profitable and ended the quarter with just over $490 million in net cash on its balance sheet as well.
Up next is ACNB Corporation ACNB, one of the few financials I currently hold in my portfolio. This holding company provides banking, insurance and financial services to both small businesses and individuals. Last Wednesday, the company delivered earnings of $1.32 a share, a big jump from profits in the same period the prior year.
There were several notable items within its first quarter results. First, the financial institution had no charge offs during the quarter and its percentage of non-performing loans also dropped. Deposits also increased for the first time in nine quarters. Finally, the unrealized losses on its bond portfolio declined significantly from the first quarter of 2023 and likely will continue to do so as interest rates come down. Overall, more than a solid quarter.
We end with a shout out to Collegium Pharmaceutical, Inc. COLL, which will report second quarter results in around ten days. However, the company just reaffirmed FY2024 guidance yesterday. Collegium also announced a strategic and accretive acquisition Tuesday as well. The market applauded this move by sending shares just over 10% higher in trading on Tuesday. This is unusual trading action in an acquirer’s stock from a purchase announcement, and confirms the market likes this acquisition.
At the time of publication, Jensen was long ACNB, CORT and COLL.
