It has been a while for sure, but as the old adage says that every dog has his or her day. In this case, the dog in question is the Russell 2000. This index measures the performance of the 2,000 smaller companies that are included in the Russell 3000 Index, which itself is made up of nearly all U.S. stocks. The Russell 2000 is widely regarded as a bellwether of the U.S. economy because of its focus on smaller companies that focus on the U.S. market.
In a new Jefferies report, outstanding small and midcap strategist Steven DeSanctis and his team screened for quality companies in the Russell 2000 that are rated Buy and are not trading at 52-week highs. The report said this about the outstanding performance over the past year:
The Russell 2000 has just completed its best 12-month gain ever and by a fairly wide margin. Subsequent performance after a big run is weaker, however, relative valuations versus large stands in the 58th percentile, the macro backdrop is getting much better and reflected in earnings and revenue estimates moving faster than performance, mergers and acquisitions activity is accelerating and Steven thinks fund flows will continue to be strong into the size segment. The rotation has been incredibly fast, but he still believes that value and cyclicals are the places to be. Value is still very cheap versus Growth, its earnings and sales estimates are moving up faster than Growth and a better M&A backdrop really boosts the style.
Fifteen stocks hit the screen, and these five are rated Buy and look like great ideas now. Some may even get a seasonal boost. They all offer very good upside potential. While they definitely better suited for investors with a touch more risk tolerance, it is still important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This stock is way off of its 52-week high and is a solid biotech idea for investors. Denali Therapeutics Inc. (NASDAQ: DNLI) is a biopharmaceutical company engaged in the development and commercialization of a portfolio of product candidates for neurodegenerative diseases. Its product pipeline includes LRRK2, RIPK1, TREM2 and Tau.
The company announced last week that the U.S. Food and Drug Administration (FDA) has granted fast-track designation to ETV:IDS, a treatment for patients with Hunter syndrome. Denali said the designation may allow for early and frequent communication with the FDA regarding the development of the drug, and it also enables a rolling review, and potentially a priority review, of the marketing application.
The brain-penetrant enzyme replacement therapy is being evaluated in a Phase 1/2 study in patients with Hunter syndrome as a potential treatment for both central nervous system and peripheral manifestations of the disease.
Jefferies has an $95 price target on the shares, and the Wall Street consensus target is $81.00. Friday’s final print was $62.01 per share.