Oppenheimer said the smaller group of stocks has the potential for big gains
Small- and mid-cap stocks are expected to rally as the Federal Reserve cuts interest rates, and Oppenheimer named some of his favorite plays in the space. Stocks with smaller market capitalizations, which are more sensitive to higher borrowing costs, are expected to recover and outperform as the Fed begins its rate-cutting cycle. In 2024, the Russell 2000 small-cap index’s 8% gain still lags the S&P 500’s gain of about 19%. However, Oppenheimer thinks these names have more upside. “While the S&P 600 and Russell 2000 remain below their July peaks and 2021 highs, these small-cap indexes continue to defend support and maintain the upward trend. Oppenheimer lists his top picks with market capitalizations ranging from $1 billion to $10 billion. A few names are below and the company rates them all as superior. Internet service provider Cogent Communications is an underrated beneficiary of artificial intelligence, according to analyst Timothy Horan. “We believe the company has valuable assets that are not yet recognized [Internet Protocol version 4] The stock offers a 5% dividend yield and healthy – albeit “unstable” – free cash flow growth, the analyst added. Sure enough, the stock is up just 1.1% year to date. Horan set a $90 price target on the stock, implying 17% upside potential from Monday’s close. Cogent Communications in 2024. Healthcare services stock Chemed is another one of Oppenheimer’s favorites. According to analyst Michael Wiederhorn, Chemed has two segments: Vitas Healthcare, a hospice care company, and Roto-Rooter, a plumbing cleaning company. he is well positioned to benefit from aging demographic trends. “Mainly driven by favorable demographics, strong market share gains and the post-pandemic recovery, Vitas’ growth is trending above historical levels,” he wrote. With cash flow and attractive growth, we believe Chemed remains an attractive stock to own over the next 12-18 months,” the analyst said. Year-to-date, the stock is down about $1. %. Wiederhorn’s $650 price target sees the stock up 12.5% from Monday’s close. According to Oppenheimer, CHE mountain YTD Chemed in 2024 One way for small-cap investors to gain exposure. The rise in sports betting is via Online Sports Betting (OSB) data provider Genius Sports, which could see a gain of more than 37%, based on Oppenheimer’s $10 price target on the stock. “GENI is firmly established as a major player in the US OSB landscape after expanding its National Football League and Football DataCo partnerships respectively into the year,” said analyst Jed Kelly. 2028 and 2029.” He noted that professional sports leagues could also use online sports betting to attract more fan engagement. Genius Sports shares are up about 18%. from the beginning of the year until now. —CNBC’s Michael Bloom contributed to this report.
