It might surprise investors to learn that small-cap stocks, as a whole, outperformed the S&P 500 in February. The iShares Russell 2000 ETF (IWM), which tracks the investment results of the Russell 2000, an index which measures the performance of the small-capitalization sector of the US equity market, is up 3.55% in the past month. The S&P 500 is currently down 1.95%.
This trend is likely to continue. Which is why today we're highlighting 4 stocks from our Top 10 Small-Cap screen, which is just 1 of the 10 outperforming screens in our POWR Screens 10 service (more on that below).
Heidrick & Struggles International, Inc. (HSII), Mechel PAO (MTL), The Hackett Group, Inc. (HCKT), and Ituran Location and Control Ltd. (ITRN) are fundamentally strong small-cap stocks that investors should consider adding to their portfolios in March.
Heidrick & Struggles International, Inc. (HSII)
HSII provides executive search and consulting services to businesses and business leaders globally. The company facilitates the recruitment, management, and development of senior executives. It also offers consulting services, including leadership assessment and organizational transformation. The company has an $848.31 million market capitalization.
For the fiscal third quarter ended September 30, HSII’s total revenue increased 83.6% year-over-year to $265.32 million. Adjusted net income rose 191.8% from the prior-year quarter to $22.42 million, while adjusted earnings per common share improved 184.6% from the same period the prior year to $1.11.
The consensus EPS estimate of $0.79 for the fiscal fourth quarter ended December 2021 indicates a 33.9% year-over-year increase. Likewise, the consensus revenue estimate for the same quarter of $261.40 million reflects an improvement of 62.4% from the prior-year period. Moreover, HSII has an impressive surprise earnings history, as it has topped consensus EPS estimates in each of the trailing four quarters.
The stock has gained 20.7% over the past year and 2.7% intraday to close Friday’s trading session at $43.30.
HSII’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
HSII has a Growth and Value grade of A and a Sentiment and Quality grade of B. In the 20-stock Outsourcing – Staffing Services industry, it is ranked #1. The industry is rated A. Click here to see the additional POWR Ratings for HSII (Momentum and Stability).
Mechel PAO (MTL)
MTL and its subsidiaries operate mining, steel, and power businesses internationally, selling coke, steam coal, semi-finished steel, pig iron and metal products, and electricity supply. It functions through the segments of Mining; Steel, and Power. The company is based in Moscow, Russia, and has a market capitalization of $611.48 million.
On December 27, MTL announced that it had received about 270 equipment units, including more than 80 large-scale machines and assembly units. About the company’s mining equipment revamp, MTL’s Chief Executive Officer Oleg Korzhov commented, “This new equipment will enable us to reduce outages caused by repairs, and boost output at our facilities in Irkutsk Region, Yakutia, and Kuzbass. Considering steady demand and favorable price trends on commodity markets that we see over the past several quarters, it is very important for us to ensure production growth.”
For the nine months ended September 30, MTL’s revenue from contracts with customers went up 46.7% year-over-year to RUB287.82 billion ($3.43 billion). Operating profit increased 500.8% from the same period the prior year to RUB72.24 billion ($861.01 million). Profit for the period came in at RUB54.96 billion ($655.11 million), registering a substantial improvement from its negative year-ago value.
Street revenue estimate for fiscal 2021 of $4.64 billion reflects a rise of 28.9% from the prior year.
The stock has gained 23% over the past year to close Friday’s trading session at $2.25.
MTL’s POWR Ratings reflect this promising outlook. The stock has an overall A rating which equates to Strong Buy in our proprietary rating system. MTL has an A grade for Momentum and Quality and a B grade for Growth, Value, and Sentiment. It is ranked #1 out of the 34 stocks in the Steel industry. The industry is rated A.
In addition to the POWR Rating grades we’ve stated above, one can see the MTL rating for Stability here.
The Hackett Group, Inc. (HCKT)
HCKT is a strategic consultancy firm based on Intellectual Property. The company caters to global enterprises by offering digital transformation solutions that power workflow automation and analytics. It has a $598.36 million market capitalization.
For the fiscal fourth quarter ended December 31, HCKT’s net revenue increased 17.8% year-over-year to $69.78 million. Net income and net income per common share came in at $16.52 million and $0.50, registering a rise of 1,750.1% and 1,566.7% from the prior-year period.
Street EPS estimate for the quarter ending March 2022 of $0.32 reflects a rise of 18.5% from the same period the prior year, while Street revenue estimate of $71.56 million for the same quarter indicates an increase of 12.7% from the prior-year quarter. In addition, HCKT has topped consensus EPS estimates in each of the trailing four quarters, which is impressive.
HCKT’s stock has gained 33.1% over the past year to close Friday’s trading session at $20.79. It also gained 6.7% over the past six months.
It’s no surprise that HCKT has an overall A rating which translates to Strong Buy in our POWR Rating system. HCKT has a Quality grade of A and a Stability and Sentiment grade of B. It is ranked #1 out of the 11 stocks in the Outsourcing – Tech Services industry. The industry is rated A.
Click here to see the additional POWR Ratings for HCKT (Growth, Value, and Momentum).
Ituran Location and Control Ltd. (ITRN)
ITRN is a location-based services and wireless communication products provider. The company, based in Azor, Israel, operates through the segments of Location-Based Services and Wireless Communications Products. The company has a market capitalization of $440.23 million.
On January 26, ITRN announced that its Brazilian subsidiary had acquired 50% of Mob-Lab in Brazil, an urban mobility startup. The company retained an option to acquire control of Mob-Lab in the future. This should stand to benefit the company.
On November 16, declared a quarterly dividend of $0.14 per share, totaling approximately $3 million, which was payable to shareholders on January 5, net of taxes at the rate of 25%. This reflects upon the company’s ability in cash generation.
ITRN’s revenues increased 8.9% year-over-year to $65.70 million in the fiscal third quarter ended September 30. Gross profit rose 16.4% from the prior-year quarter to $31.87 million. Operating income improved 31.7% from the same period the prior year to $13.89 million.
Analysts expect ITRN’s EPS to increase 22.5% year-over-year to $0.49 for the fiscal quarter ending March 2022, while Street revenue estimate of $74.38 million for the same quarter indicates an improvement of 10.4% from the prior-year period. Additionally, the stock has beaten consensus EPS estimates in three out of the trailing four quarters.
ITRN’s shares have gained 2.1% intraday to close Friday’s trading session at $21.28.
ITRN has an overall rating of A, equating to Strong Buy in our proprietary rating system. The stock has a Quality grade of A and a Growth, Value, Stability, and Sentiment grade of B. It is ranked #1 out of the 68 stocks in the Auto Parts industry.
To see the additional POWR Rating for Momentum for ITRN, click here.
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HSII shares were trading at $42.97 per share on Monday afternoon, down $0.33 (-0.76%). Year-to-date, HSII has declined -1.74%, versus a -8.59% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
4 Best Small-Cap Stocks to Buy in March StockNews.com
