Small-cap growth stocks could be ready to turn the corner after a few years of being outshone by large-cap growth, high technology peers.
As the U.S. economy starts to recover from the shock of COVID-19 forced shutdowns, small-cap growth stocks should benefit the most. That’s because they’re largely being valued at or near historical lows. And, that’s good news for small-cap stocks, which have suffered significant under performance in recent years.
Once investors realize that small-cap stocks should have superior potential returns over the next two to three years, you’ll see small-cap stocks’ valuations and their prices rise.
UPWORK
- Market value: $1.6 billion
- YTD total return: 30.0%
- 3-year annualized revenue growth: 22.3%
Upwork (UPWK, $13.87) went public on Oct. 3, 2018, at $15 a share. In the 21 months since, the online marketplace that connects freelancers with clients has delivered losses to its IPO investors.
However, despite falling to a 52-week low of $5.14 per share in April, it’s beating the S&P 500 handily year-to-date. That’s thanks in large part to an 85% run over the past three months.
The company has gone through some rotation in the C-suite. In December, then-CEO Stephane Kasriel stepped down from the top job after leading the company since April 2015, long before it became a public company. Taking over as CEO was Hayden Brown, the company’s chief marketing and product officer.
In 2017, the last full year before Upwork went public, it had annual revenue of $202.6 million. Two years later, Upwork reported annual revenue of $300.6 million, 19% higher than in 2018, and 48% higher than in 2017. Analysts continue to expect double-digit revenue growth this year and next.
