Do these 3 small Momentum stocks generate big gains?
MINISO Group Holding Limited (NYSE: MNSO), PDF Solutions Inc. (NASDAQ:PDFS), And Certara Inc. (NASDAQ: CERT) are relatively unknown stocks that are currently showing strong price momentum.
Growth-oriented investors are constantly on the lookout for stocks with enough momentum to propel gains. Often stocks with strong bullish momentum come from the ranks of small unknown stocks rather than familiar large caps.
It is not uncommon for smaller stocks to show greater price momentum. There are several reasons for this:
- Greater growth potential: Small businesses often have more room for growth than larger, more established businesses and may be able to increase profits and revenue at a faster rate. This may attract investors who seek higher returns and are willing to take on more risk.
- More agile management: Small business management teams are often able to launch new projects more quickly.
- Less analyst coverage: Smaller, lesser-known companies tend to receive less coverage from financial analysts and the media. When positive news is released, there is usually less attention from investors and more potential for the stock price to rise. It might sound counter-intuitive, but it boils down to less non-sayers and fussy people looking for reasons not to buy.
MINISO, Certera and PDF Solutions are all smaller companies by market cap. Here is a look at their current upside potential.
MINISO, based in China, operates 4,200 stores in 80 countries, selling a wide range of products, including household goods, fashion accessories, electronics, beauty products, stationery, toys and even snacks.
Its market capitalization is $5.492 billion, which puts it in mid-cap territory. In February, the company held a press conference announcing collaborations with other supply chain and content management partners.
The stock has returned 9.87% over the past month and 60.45% over the past three months. It is currently showing a bullish pullback (yes, it is), pulling back from a high of $19.49 on March 6 and holding well above its 50-day moving average, as you can see in using MarketBeat chart for MINISO.
Earnings growth forecasts confirm that Minso continues its momentum: Wall Street expects the company to earn $4.68 per share this year, up more than 1,200% from 2022. The company is expected to increase its profits by an additional 29% in 2024.
Based in Santa Clara, Calif., PDF Solutions provides software, services and intellectual property to help semiconductor manufacturers improve efficiency and processes and increase the quality of manufactured products.
In March, the company announced it was working with software company Voltaiq to help battery makers improve yield, cut costs and speed up the ramp-up of new factories. This is yet another example of the lithium battery supply chain taking on greater importance worldwide.
In the press release, PDF Solutions discussed the importance of batteries for increasing use in consumer electronics, electric vehicles and network storage.
Shares of PDF Solutions are up 34.86% in the past three months and 40.67% so far this year. Its chart on MarketBeat shows a strong rally over the past few months.
The stock is extended beyond its most recent cupped base, which it cleared in January. At this point, it is best to wait for a pullback in the moving average after some investors have taken profits. This often provides a new entry point for buyers.
Certara provides software and consulting to pharmaceutical and biotechnology companies to accelerate drug development, improve clinical trial efficiency and success rates, and gain regulatory approval to bring drugs to market.
The shares rose 12.50% last week and 18.88% last month.
The company has a few strengths in the momentum business.
First, on March 22, the stock will join the S&P 600 Small Cap Index, replacing IAA Solutions, which is being acquired by Ritchie Bros. Auctioneers, Inc. (NYSE: RBA). Joining an index is good for a stock because funds mirroring the index need to add stocks as they rebalance,
Second, Certara is in a growing field and is using AI in its software to better deliver data analytics to its customers.
Third, it is a young company, going public in December 2020.
MarketBeat analyst data for Certara shows a consensus ‘moderate buy’ rating. Wall Street expects earnings growth of 15% this year and 25% next year.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.