As the economy continues to grow, it’s a great time to consider small-cap (short for small capitalization) stocks. A stock is considered a small-cap if it has a market capitalization between $300 million and $2 billion. Often, smaller companies provide…
opportunities for growth that larger companies cannot.
This is due to the law of large numbers. This means it’s more difficult for larger companies to grow as they get bigger. Plus, small-cap stocks have historically outperformed their larger-cap peers. From December 31st, 2000 to December 31st, 2020, the small-cap Russell 2000 index returned 308.4%, significantly outperforming the 184.5% gain of the large-cap S&P 500 index.
Small-cap stocks also benefit from an economic recovery as they are more sensitive to the economy. So far this year, the Russell 2000 is already up 13.6%. This means that as the economic recovery continues, small-cap stocks like Greif Inc. (GEF – Get Rating), Inter Parfums, Inc. (IPAR – Get Rating), and Abercrombie & Fitch Company (ANF – Get Rating) are definitely worth considering.
GEF is a producer of industrial packaging products and services with manufacturing facilities located in many countries. The company offers a comprehensive line of rigid industrial packaging products, such as steel, plastic drums, rigid intermediate bulk containers, closure systems for industrial packaging products, and transit protection products.
The company is seeing great improvement in many of its key end markets. For instance, the industrial sector has shown a pickup in activity over the past few months, driven by a ramp-up in global economic activities. GEF is generating solid sales to lubricant and bulk chemical customers. This is due to improved auto demand and improving industrial conditions.
Plus, tanks and coating sales were up as a result of better auto and construction demand. Sales to pharma and personal care markets also remain strong, and the firm’s pricing actions are helping to mitigate the impact of higher costs and aid margins. This is a result of its restructuring activities, which have included optimizing and integrating operations.
The company has an overall grade of A, which translates into a Strong Buy rating in our POWR Ratings system. GEF has a Growth Grade of B as the company has grown earnings an average of 41.3% a year over the past five years. Earnings are expected to rise a whopping 80% year over year in the current quarter.
GEF also has a Value Grade of A, which isn’t surprising as it has a trailing P/E ratio of 14.95. Plus, its price-to-sales ratio of 0.6 is well below the industry average. We also provide Momentum, Stability, Sentiment, and Quality Grades for GEF, which you can find here. GEF is ranked #1 in the Industrial – Packing industry. You can find other top stocks in this industry by clicking here.
IPAR operates in the fragrance business and manufactures, markets and distributes fragrances and fragrance related products. It sells its product under the brand names JIMMY CHOO, bebe, Paul Smith, Abercrombie & Fitch, COACH, and others. The company sells its products to department stores, perfumeries, specialty stores, and domestic and international wholesalers and distributors.
IPAR reported strong sales numbers for the second quarter as the company’s product launches and strategic alliances have yielded…
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