The Russell 2000 Index (RUT), which measures the performance of approximately 2,000 small-cap U.S. equities, has underperformed some of its bigger, better-known equity benchmarks this year. The RUT has muscled its way to a gain of just 5% on the year, while the Nasdaq Composite ($NASX) and S&P 500 Index ($SPX) have notched double-digit percentage gains.
But among the small-caps, one name in particular has had a banner year, and doubled in value since the start of January. Plus, Wall Street is predicting even more big gains in 2024. As investors rediscover their appetite for small-cap stocks, here's one breakout name with big upside potential.
Holley Stock Has Doubled in 2023
Holley Inc. (HLLY) has emerged as a standout performer in the auto parts industry as well as the Russell 2000. As an auto parts specialist, they cook up, build, and sell all sorts of parts and accessories under names like Holley, Holley EFI, APR, MSD, and more. They sell straight to shops, through distributors, and online.
On a year-to-date basis, HLLY has gained more than 100% to double in value. That said, HLLY is about 47% below its August highs north of $8, which means it's still possible to buy the dip on this name in anticipation of another leg higher.
Interestingly, one top company insider likes the stock around current levels. CEO Matthew Stevenson just scooped up 25,000 shares of HLLY at around $4.02 each back on Nov. 22, for a total investment of $100,735. Holley's own CEO now holds a 2% stake in his company.
How High Can Holley Stock Rise?
Holley is on the path to consistent profitability in 2023, after years of reporting net losses. The third quarter yielded a net income of $750,000, much improved from a $1.6 million net loss in the corresponding quarter of 2022. Earnings per share rose to $0.03 and matched analysts' estimates, while revenue of $156.5 million came in stronger than expected.
Looking ahead, Wall Street is targeting 214% EPS growth for fiscal 2023, followed by 45% EPS growth in fiscal 2024.
Out of the 10 analysts tracking the company, a whopping 7 are waving the “strong buy” flag, 1 is giving a “moderate buy” nod, and 2 are in the “hold” camp.
Now, the juicy part – these analysts' average price target for Holley is $7.69, signaling an expected 80% upside from Friday's close. And the Street-high target goes all the way up to $12, suggesting the stock could pop 181% over the next 12 months.
