As the United States continues to recover from the COVID-19 pandemic-led disruptions at a faster-than-expected pace, small-cap stocks have been making a solid comeback. Also, small- and medium-sized businesses (SMBs) have been getting substantial support from the government in the form of tax deferrals and subsidies.
The $1.9 trillion pandemic rescue package passed by the Biden administration is expected to boost consumer spending, which should drive top-line growth for these companies. Furthermore, consistent innovations have allowed small-cap companies to quickly square up to the big names in their respective industries in terms of providing quality products and services.
Investors growing interest in small-cap stocks is evident in the SPDR S&P 600 Small Cap ETF’s (SLY) 41.6% gains over the past six months, outpacing the 20% returns of the large-cap focused SPDR S&P 500 ETF Trust (SPY). So, for investors who want to invest in stocks with robust growth potential and can tolerate a degree of market volatility, we think small-cap growth stocks are an ideal investment now. Full House Resorts, Inc. (FLL) and U.S. Global Investors, Inc. (GROW) possess solid growth attributes and are currently trading under $10.
Full House Resorts, Inc. (FLL)
Headquartered in Las Vegas, Nevada, FLL owns, operates, develops, manages, leases, and invests in casinos and related hospitality and entertainment facilities. The company operates five casino facilities in Mississippi, Indiana, Nevada, and Colorado. It has a market capitalization of $278.40 million.
The company’s revenue from the casino segment for the fourth quarter, ended December 31, 2020, increased 4.6% year-over-year to $27.20 million. FLL’s operating Income for the quarter was $7.66 million compared to an operating loss of $369,000 in the prior-year period. The company’s net income was $3.50 million compared to net loss of $4.13 million in the fiscal year 2019 fourth quarter. Also, its EPS came in at $0.12 compared to loss per share of $0.15 in the prior-year period.
The company’s EBITDA has grown at a CAGR of 6.3% over the past three years, while its EBIT increased at a CAGR of 16.5% over the same period. This reflects the company’s stable growth over the past few years.
For the quarter ended March 31, 2021, analysts expect FLL’s EPS to increase 125% year-over-year to $0.04. Its revenue is expected to increase 170.6% year-over-year to $39.27 million for the quarter ending June 30, 2021.
On March 31, 2021, FLL entered an agreement for a five-year, senior secured revolving credit facility. It expects to use the $15 million credit facility for working capital, letters of credit, and other general purposes. It will provide the company with additional liquidity and flexibility. The stock has rallied 598.3% over the past year to close yesterday’s trading session at $8.17.
It’s no surprise that FLL has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has a B grade for Growth, Value, and Quality. Click here to see FLL’s ratings for Stability, Momentum, and Sentiment.
FLL is ranked #2 of 31 stocks in the Entertainment-Casinos/Gambling industry.
U.S. Global Investors, Inc. (GROW)
With a market cap of $108.62 million, GROW is an innovative investment management company with vast experience in global markets and specialized sectors. The company furnishes an investment program for each of its clients, and manages, supervises and conducts certain businesses of United States Global Investors Funds (USGIF). It also trades for its own account.
For the quarter ended December 31, 2020, GROW’s operating revenues increased 482.3% year-over-year to $5.17 million. Its operating income came in at $519,000, compared to an operating loss of $511,000 in the prior-year period. Its net income was $16.66 million compared to a net loss of $1.04 in the prior-year period. Its EPS came in at $1.10.
GROW’s revenue and EPS have increased at CAGRs of 17.5% and 148.2%, respectively, over the past three years. This reflects the company’s steady growth over the past few years.
GROW’s airlines ETF, the U.S. Global Jets ETF (JETS), is now listed on the Mexican Stock Exchange (BMV). The new listing will expand JETS’ global footprint and allow investors in Mexico to access the fund. The stock has gained 466.4% over the past year and closed yesterday’s trading session at $7.25. It has also gained 33% year-to-date.
GROW’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. The stock also has a B grade for Growth, Value, and Quality. Click here to see the additional ratings for GROW (Stability, Momentum, and Sentiment).
GROW is ranked #14 of 61 stocks in the Asset Management industry.
The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
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FLL shares were trading at $8.22 per share on Wednesday afternoon, up $0.05 (+0.61%). Year-to-date, FLL has gained 109.16%, versus a 11.29% rise in the benchmark S&P 500 index during the same period.
About the Author: Ananyo Guha Niyogi
Ananyo’s ardent interest in capital markets, wealth management, and financial regulatory issues, led him to a career as an investment analyst. His goal is to educate individual investors by making complex financial issues easy to understand. More...
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