2 Small Caps Bucking the Trend

Last week was a difficult one for small-cap stocks. The Russell 2000 fell 2.4%, while the S&P 500 and Nasdaq finished only fractionally lower. 

That relative weakness isn’t necessarily a reason to steer clear of smaller companies. Broad pullbacks can bring down quality businesses alongside the rest of the market, creating more attractive entry points for investors willing to be selective.

Small caps can therefore be particularly interesting after periods of outsized selling. Some names may be available at a discount, while others can distinguish themselves by holding up better than the wider group.

Of course, a lower share price or relative resilience alone doesn’t make a stock attractive. Separating the strongest small caps from the rest still requires careful research.

Thankfully, there’s a way to expedite that process — all you have to do is turn to …

Small Caps Stock Strategy 

Our proprietary quant rating system evaluates 4,600 stocks each day through the lens of 115 unique metrics and factors split across 7 categories called Component Grades. This provides a balanced, big-picture overview of a stock’s fundamentals, and it’s all distilled into a simple, intuitive metric — a stock’s Zen Rating.

A Zen Rating of A, equivalent to a Strong Buy recommendation, is only awarded to the stocks that rank in the top 5% for overall fundamentals. That narrows the search down, but you’re still left with 230 stocks to consider on any given day. Thankfully, you can narrow the search down even further — by taking a look at one of our exclusive Zen Strategies.

These are 11 carefully constructed portfolios, each consisting of just 7 stocks selected to deliver outsized returns. Today, we’ll be taking a look at a portfolio with an all-time annual return of 36.28%, which has delivered a 22.17% gain since the start of the year, far outpacing the S&P 500’s 11.64% rally in the same timeframe. This week, the spotlight is on our Small Caps stock strategy.

Lifetime Brands (LCUT)

Our first pick, Lifetime Brands, designs and sells kitchenware, tableware, and other consumer products for the home. This $197 million market-cap stock ranks in the top 1% of everything we track, giving it a Zen Rating of A. It is also the highest-rated stock in the A-rated Furnishings Fixture & Appliance industry.

LCUT boasts a very balanced fundamental profile. In terms of Sentiment, it ranks in the top 13%, indicating strong smart money interest. Value is another strong suit — coming in at the top 11%. Next up are Financials — where Lifetime Brands is in the top 9%. With all of that said, the star of the show is the Growth Component Grade rating — a category where LCUT ranks in the top 5% of all the stocks we track.

One weaker area is Safety, which sits around the middle of the pack. Not too bad, not exceptional either — and essentially par for the course for a small business.

What makes Lifetime Brands particularly appealing now is price action. After a monster 104% rally on the 1-year chart, the stock has pulled back by almost 11% in the past 30 days — and since the fundamental picture is so strong, this means that a quality business essentially went on sale.

RCM Technologies (RCMT)

Our second pick, RCM Technologies, provides engineering, specialty healthcare, and information technology services.

RCMT also ranks in the top 1% of all the stocks we track, earning it a Zen Rating of A. But there’s an even more impressive distinction here — RCMT is currently the highest-rated stock in our system, as well as the top-ranked stock in the Conglomerate industry.

You don’t get to the top of our system without a fundamental profile that’s strong across the board. Safety comes in at the top 19%, followed by Momentum in the top 11%. In terms of both Growth and Sentiment, RCM Technologies ranks in the top 7%. Value is a touch better, in the top 5%, thanks to a PEG of 1.2x — but the standout is Financials, where RCMT ranks in the top 1%.

Our Artificial Intelligence rating is the one part of the profile that sits closer to the middle of the pack. Still, with strength across every major fundamental category, that’s hardly a dealbreaker. 



The company’s last earnings report on August 12 was a blowout and saw EPS come in at $0.82 against expectations of $0.62. With rock-solid fundamentals and a valuation that’s still very attractive relative to growth prospects, RCMT definitely merits a closer look.

Interested In More Great Stock Picks? 

The 2 stocks highlighted above are just a fraction of what you get from our proven Small Caps strategy.

That’s because each day our system recalibrates — and Zen Strategies members get access to the top 7 small cap stocks based on 115 different parameters that point to outperformance. 

See all Top 7 Small Cap Stocks here >

However, maybe small caps aren’t what you’re after right now. Perhaps you would like to see all 11 of our market beating strategies including Buy the Dip, Momentum, Value, and our coveted AI Factor model. 

Each featuring the top 7 stocks.

Each featuring tremendous performance.

We spell it all out in this timely presentation below that lives up to its name:

77 Best Stocks Now! > 

What to Do Next?

• 77 Best Stocks NOW! >
• Options Trading with the Zen Ratings >
• 2 New Stocks to Buy from Steve Reitmeister >

Want to get in touch? Email us at news@wallstreetzen.com.