The Russell 2000 Index (RUT) is a benchmark for small-cap stocks, with an average market cap of $2.85 billion. It comprises (approximately) 2,000 companies within the broader Russell 3000 Index, representing approximately 7% of the total market capitalization of the Russell 3000.
Small-cap stocks have historically been regarded as attractive prospects for growth investors - but with mega-cap names dominating the artificial intelligence (AI) explosion of 2023, and higher interest rates keeping most other growth names under pressure, the RUT has struggled significantly this year. The Russell 2000 iShares ETF (IWM) has managed to gain just 1.1% on a YTD basis, compared to 14.9% for the S&P 500 SPDR (SPY) - and a 38.7% jump for the Nasdaq QQQ Invesco ETF (QQQ).
Over the past week, though, as stocks snapped out of their second-half slump in a major way, it's worth pointing out that small-caps led the charge. After lagging its larger peers right through Wednesday's Fed reaction, an eleventh-hour surge sent the IWM to a gain of 7.6% on the week, leading the major equity benchmarks higher.
Against this backdrop, here's a look at one small-cap stock analysts are predicting will double.
Aspen Aerogels: What It Does and Why It Matters
Aspen Aerogels, Inc. (ASPN) is an energy technology company focused on sustainable solutions, primarily engaged in making insulation products that find their place in the energy, transportation, and construction industries. These nifty products do some cool things: they reduce heat loss, lower emissions, amp up safety, and make things more efficient. Their portfolio of aerogel products optimizes everything from electric vehicles (EVs) to energy infrastructure assets.
Take their PyroThin thermal barrier, for example, which is used to guard EV batteries. This can up the game in terms of performance, safety, and range for electric vehicles, and those are in high demand. Another star in their lineup is Pyrogel insulation, which reduces heat loss, and emissions, and makes energy infrastructure applications safer and more reliable.
In a world where multiple industries are grappling with the impacts of climate change and energy transitions, ASPN is not only a leader in innovation but also in financial performance.
ASPN’s Recent Performance
While the broader RUT has struggled, Aspen Aerogels has been racing higher on the charts. Over the past six months, the stock price is up by 44% - outpacing not only small-caps, but even the tech-focused QQQ.
The stock's most recent leg higher was fueled by an earnings surprise on Oct. 28, when the company reported a narrower-than-forecast Q3 loss. Additionally, revenue of $60.8 million beat the Street's expectations.
These folks have been on a winning streak, beating bottom-line estimates for four quarters straight.
Financials And Outlook: What to Expect Next
ASPN comes with a market cap of $604 million, indicating plenty of room for growth. Forward revenue growth is pegged at 48%, which is several orders of magnitude beyond the sector median for materials.
Analysts see plenty of upside ahead, too. Among 8 analysts tracking the stock, every single one gives ASPN a “strong buy” rating. Plus, they've set their sights high with an average price target of $21.50 - which would be a staggering gain of 137% from Friday's close.
Conclusion
In a nutshell, ASPN is a standout small-cap stock that continues to surprise to the upside. With exposure to in-demand industries, innovative tech, and a healthy forecast for future growth, this is one Russell 2000 stock set for potentially significant returns.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
