The Russell 2000 index includes the smallest companies within the Russell 3000 index. It’s utilized by investors interested in small-cap companies and serves as a benchmark for evaluating small-cap stocks as potential investment opportunities.The Russell 2000 index includes the smallest companies within the Russell 3000 index. It’s utilized by investors interested in small-cap companies and serves as a benchmark for evaluating small-cap stocks as potential investment opportunities. Regarding undervaluation, there are several companies within the Russell 2000 that have been identified as potentially undervalued: SkyWest (SKYW): A regional airline offering passenger and cargo services, aircraft leasing, and charter operations. Over the past year, SkyWest’s share price has almost doubled, outperforming other airlines facing share price declines during the same period. Its revenue has increased, and it reported a strong net income for Q1 2024. SkyWest trades at a lower forward price/earnings ratio compared to the industry average. Innovative Industrial Properties (IIPR): An industrial REIT that owns and operates cultivation and manufacturing facilities for the regulated cannabis industry. IIPR’s share price has risen by 49% over the past year. It offers a high annual dividend yield and has continued to make portfolio purchases and developments. IIPR has a lower forward price/earnings ratio than the industry average. M/I Homes (MHO): A residential construction company focused on single-family homes in various states. MHO has experienced a 43% increase in share price over the past year. It recently reported an increase in total revenue and net income for Q1 2024. MHO trades at a significantly lower forward price/earnings ratio compared to the industry median. These companies are highlighted as having potential for undervalued stocks within the Russell 2000 index. It’s important to note that the information provided is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and due diligence before making any investment decisions.
The Russell 2000 index contains the smallest companies within the Russell 3000 index.
The Russell 2000 is useful for investors looking to invest in small-cap companies. It measures the overall health of the small-cap market and provides a reference point for finding small-cap stocks that may be solid investment opportunities.
Within the Russell 2000, there are a number of undervalued stocks that can offer investors incredible returns. Below, I pick out some of the most undervalued companies within the index that have delivered impressive share price growth over the past year.
SkyWest (SKYW)
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HeavenWest (NASDAQ:SKYW) is a regional airline that provides passenger and cargo services. It also leases and charters aircraft and operates a fleet of approximately 500 aircraft.
Over the past year, the share price has nearly doubled, which is a big outlier compared to other airlines whose share price has fallen sharply over the same period, such as American Airlines (NASDAQ:EEL) And United Airlines (NASDAQ:UAL), which fell by 41% and 17% respectively.
SkyWest reported first-quarter results on April 25. Total revenue increased 16% year-over-year. A net loss of $22 million was reported for Q1 2023, improving to a net income of $60 million for Q1 2024.
SkyWest is a unique stock in an industry that many investors are highly skeptical of due to the overall difficulty in producing strong returns. SkyWest, however, appears to be different and is thriving.
SkyWest is trading at a lower forward price/earnings ratio of 12.22, compared to the industry average of 18.18.
In May, airfares fell 6% from the previous year. As the busy summer season approaches, this could boost SkyWest’s revenue growth.
Innovative Industrial Properties (IIPR)
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Innovative industrial properties (NYSE:IIPR) is an industrial REIT that owns and operates cultivation and manufacturing facilities for the regulated cannabis industry.
Over the past year, the share price has risen by 49%, driven by portfolio purchases, development and dividend growth.
IIPR offers an annual dividend yield of 7.15% and recently raised its dividend yield to 4.4%. Its next quarterly payment is $1.99 per share on July 15th.
On May 8, IIPR reported its earnings for the first quarter of 2024, stating that total revenue fell 1% and net income fell 4% year over year. However, it does have a cash position of $203 million and multiple properties under development in Michigan, California and Texas. On June 10, it announced that it had acquired a facility in Florida for $13 million.
IIPR has a forward price/earnings ratio of 20.55, while the industry average is 33.74.
Innovative Industrial Properties is a good choice for investors looking for undervalued stocks with continued growth potential and a high dividend yield.
M/I homes (MHO)
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M/I houses (NYSE:MHO) is a residential construction company that buys land, builds single-family homes, and sells its properties in states such as Ohio, Indiana, Texas, North Carolina, Tennessee, Florida, Texas, and Minnesota.
On April 24, MHO reported earnings for the first quarter of 2024, stating that total revenue increased 5% and net income increased 34% compared to the prior year. Total home completions increased from 2,007 for Q1 2023 to 2,158 for Q1 2024.
Over the past year, the share price has risen 43% due to a number of factors, including higher gross margins, an improved order book and new business growth.
On May 13, M/I Homes announced that its board of directors had approved a new $250 million share buyback program.
MHO is currently trading at a forward P/E ratio of 6.56, while the median forward P/E ratio of its industry is 15.07.
M/I Homes has strong growth potential and is still trading at a low valuation. It could be a great choice for investors looking for undervalued stocks.
At the time of writing, Noah Bolton had no (direct or indirect) positions in the securities mentioned in this article. The opinions expressed in this article are the opinions of the writer, subject to the InvestorPlace.com Publishing Guidelines.
The responsible issuer had no positions (either directly or indirectly) in the securities mentioned in this article on the date of publication.
Noah has about a year of experience as a freelance writer. He has worked with Investopedia and has covered topics such as stock market and financial news.
