It’s not unusual in the stock markets for laggards to become leaders at some point, and the reason is simple: Investing styles tend to change from year to year, based on valuations, currency differences, trade and a host of other items. One thing is for sure, it’s starting to look like some of the smaller capitalization stocks in the Russell 2000 that struggled last year are getting some love this year.

In a new research report, Jefferies equity strategist Steven DeSanctis has definitely spotted a trend, albeit early in the year, and it could be significant for stock investors with a higher risk tolerance. This was noted in the report:

Steven pointed out that the Russell 2000 is up ~10% year-to-date, which is the best start to the year for the index since 1987, and finds that stocks that were down the most in 2018 are now up ~19% on average year-to-date. He thinks performance this year will be reminiscent to the 2001 Small/Midcap performance and following the January rally, would recommend fading lower cap and lower quality names. He continues to favor growth over value, domestic over foreign, size and quality. Jefferies screened Buy-rated names that are higher market cap, higher return on equity, lower debt and foreign exposure, and >10% sales growth:

While 20 stocks fit the criteria that DeSanctis favors, these five top companies look like outstanding picks now. All are rated Buy at Jefferies.

Abiomed

Many on Wall Street feel this top company has virtually no competition in its space. Abiomed Inc. (NASDAQ: ABMD) engages in the research, development and sale of medical devices to assist or replace the pumping function of the failing heart. It also provides continuum of care to heart failure patients.

The company offers Impella 2.5 catheter, a percutaneous micro heart pump with integrated motor and sensors for use in interventional cardiology; Impella CP that provides partial circulatory support using an extracorporeal bypass control unit; Impella 5.0 catheter and Impella LD, which are percutaneous micro heart pumps with integrated motors and sensors for use primarily in the heart surgery suite; and Impella RP, a percutaneous catheter-based axial flow pump.

The Jefferies price target for the stock is at $460, and the Wall Street consensus target was last seen at $437.60. The stock closed Friday’s trading at $349.37 a share.

Diamondback Energy

This top Permian Basin play was absolutely eviscerated in the fourth-quarter sell-off, but it has rallied back some. Diamondback Energy Inc. (NASDAQ: FANG) is an independent oil and natural gas company headquartered in Midland, Texas, and focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves in the Permian Basin in West Texas.

Diamondback’s activities are primarily focused on the horizontal exploitation of multiple intervals within the Wolfcamp, Spraberry, Clearfork and Cline formations.

Wall Street analysts have noted in the past the company’s top-tier asset base, solid accretive additions and financial discipline, which they think allows for not only continued solid cash flow, but could put the company in play as a takeover target. Diamondback continues to drill some of the most economical wells in the United States as efficiencies improve, costs decrease and activity remains in the better regions.

Jefferies has a price target of $158 on the stock, and the posted consensus target is $148.22. The shares ended last week trading at $102.21 apiece.