syahrir maulana
BofA Securities published the top 25 small-cap stocks that rank highly on GDP sensitivity and low on refinancing risk as interest rates are expected to stay high.
BofA analysts still see select alpha opportunities within the small- and mid-cap stocks and recommend investors to focus on areas that can benefit from a GDP, commodity price, and manufacturing recovery, but have less refinancing risk, such as some in industrials (XLI), materials (XLB), and energy (XLE).
“We would avoid levered stocks with short-term/floating rate risk, and favor quality over non-earners/long duration,” Analyst Jill Carey Hall wrote in a BofA Securities Small/Mid Cap Strategy note.
She also said 2024 is a year for stock picking over passive investing.
These are GDP-sensitive small-cap stocks with low refinancing risk, that also have low leverage and a high proportion of long-term fixed debt.
- Titan International Inc. (TWI) - GDP correlation: 30%; Total debt/capita: 48%
- Hub Group Inc. Class A (HUBG) - GDP correlation: 19%; Total debt/capita: 26%
- Moog Inc. Class A (MOG.A) - GDP correlation: 16%; Total debt/capita: 39%
- Matson Inc. (MATX) - GDP correlation: 13%; Total debt/capita: 23%
- Enpro Inc. (NPO) - GDP correlation: 15%; Total debt/capita: 33%
- Perficient Inc. (PRFT) - GDP correlation: 15%; Total debt/capita: 44%
- LXP Industrial Trust (LXP) - GDP correlation: 11%; Total debt/capita: 45%
- Korn Ferry (KFY) - GDP correlation: 12%; Total debt/capita: 26%
- TTM Technologies Inc. (TTMI) - GDP correlation: 10%; Total debt/capita: 40%
- Omnicell Inc. (OMCL) - GDP correlation: 9%; Total debt/capita: 34%
- Lindsay Corp. (LNN) - GDP correlation: 7%; Total debt/capita: 22%
- Advanced Energy Industries Inc. (AEIS) - GDP correlation: 8%; Total debt/capita: 47%
- Otter Tail Corp. (OTTR) - GDP correlation: 4%; Total debt/capita: 39%
- Carpenter Technology Corp. (CRS) - GDP correlation: 5%; Total debt/capita: 33%
- Elme Communities (ELME) - GDP correlation: 4%; Total debt/capita: 37%
- Franklin Electric Co. Inc. (FELE) - GDP correlation: 4%; Total debt/capita: 11%
- St. Joe Co. (JOE) - GDP correlation: 5%; Total debt/capita: 48%
- Dycom Industries Inc. (DY) - GDP correlation: 4%; Total debt/capita: 46%
- Wabash National Corp. (WNC) - GDP correlation: 4%; Total debt/capita: 44%
- Sensient Technologies Corp. (SXT) - GDP correlation: 2%; Total debt/capita: 40%
- Mesa Laboratories Inc. (MLAB) - GDP correlation: 2%; Total debt/capita: 37%
- Veeco Instruments Inc. (VECO) - GDP correlation: 2%; Total debt/capita: 32%
- MGP Ingredients Inc. (MGPI) - GDP correlation: 2%; Total debt/capita: 26%
- CoreCivic Inc. (CXW) - GDP correlation: 1%; Total debt/capita: 45%
- NeoGenomics Inc. (NEO) - GDP correlation: 2%; Total debt/capita: 39%