It has been a tough year thus far for small-cap stocks, but Bank of America has some fresh ideas for finding value in the space. Despite a bounce this month, the Russell 2000 index of small-cap stocks has slipped a fraction this year while the large-cap S & P 500 has climbed almost 7%. Against that underperformance, Bank of America strategist Jill Carey Hall recently screened for small-cap value names with strong fundamentals. She scanned the Russell 2000 for profitable stocks that are in the top 20th percentile on one or more valuation metrics, including price-to-book, price-to-earnings and enterprise value-to-sales ratios. Beyond that, they also must fall within the top 40th percentile on average across all of the indicators. Here are 10 stocks that passed Bank of America’s screen: Online ticket platform Vivid Seats landed in the top quintile on both the ratio of price to free cash flow and price to trailing earnings. The stock has struggled recently, slipping more than 5% this year after losing more than 13% in 2023. After those losses, Wall Street sees a rebound ahead. The average analyst polled by FactSet has an overweight rating and price target implying shares can jump more than 78% in the next year. One of those bullish analysts is Ryan Sigda of Craig-Hallum. He initiated coverage of the stock earlier this month with a buy rating. “We think the company’s competitive moat continues to increase with its unique loyalty program, investments into platform expansions … , and TAM expansions,” he wrote to clients, referencing the company’s total addressable market. Retailer Urban Outfitters is another consumer name that passed the screen. The stock placed within the top 20% of the Russell 2000 when looking at the enterprise value to sales ratio. Urban Outfitters has bucked the downtrend among small-caps this year, with shares up more than 22% in 2024 after surging nearly 50% last year. URBN .RUT YTD mountain Urban Outfitters vs. the Russell 2000, year to date But Wall Street foresees a pullback, with the average price target of analysts surveyed by FactSet showing shares could fall more than 5%. The typical analyst also has a hold rating on the stock. Automotive electronics supplier Visteon also made the list, faling in the top quintile for enterprise value to sales. The stock has underperformed both small caps and the broader market this year, dropping more than 6%. Earlier this month, the Michigan-based company reported weaker revenue for the fourth quarter than Wall Street expected. Visteon also offered soft sales guidance for the full year. Still, analysts expect Visteon to rebound. The average analyst has an overweight rating and price target implying upside of almost 27%, according to FactSet.
