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Small Company Stocks will Outperform the Market in 2024, Survey Finds

LOS ANGELES, April 17, 2024 — Seventy-five percent of investors say small public company stocks will outperform most major stock indexes in 2024, according to results of the 2024 Small Public Company Investor Sentiment Survey, conducted on behalf of SNN Incorporated, a multimedia financial news and publishing company, and PondelWilkinson, Inc., an investor relations and strategic public relations firm.

Of the investors surveyed, 74% say they are investing in companies valued between $50 and $300 million market capitalization, while 26% are buying stocks across all sizes.

“Three-quarters of those surveyed expect small public company stocks to outperform most major stock indexes in 2024, with about half expecting this stock category to outperform bigger companies this year,” said Robert Kraft, CEO of SNN Network, parent company of the Planet MicroCap Showcase being held in Las Vegas April 30 – May 2.

“While a dichotomy currently exists between those who are bullish on small public companies and those who are less so, as indicated by higher gains achieved thus far into 2024 in larger-cap indexes, investors surveyed view small company stocks as sought-after investments in 2024 and said they are sticking with their investment strategies,” Kraft added.

Other key survey findings include:

  • Gains: More than half of investors (52%) expect to increase their small company portfolio in 2024, after one quarter of responders (27%) reported gains of 20% or more from this segment in 2023.
  • Sector outlook: Technology (27%), natural resources and energy (19%), and healthcare and biotech (10%) represent the sectors investors are most bullish about for 2024. These industry favorites remain unchanged from prior surveys.
  • Risk tolerance: Ninety-one percent of investors have a “moderate- to high-risk” tolerance when investing in small public companies, 51% and 40%, respectively.
  • Buy or sell: Eighty-nine percent of investors say their general time horizon for holding small public company stocks is typically long- (more than 6 months) to very long-term (buy-and-hold), 50% and 39%, respectively.
  • Investment benchmarks: Seventy-six percent of survey respondents say they also are buying small public company stocks listed outside the U.S. Additionally, survey respondents cited management teams (38%) as the most important criteria for investing, followed by profitability (37%) and stock price (17%).

“As more investors become interested in small company stocks, it is critical that management teams communicate transparently, effectively and consistently,” said Roger Pondel, CEO of PondelWilkinson. “Where companies communicate their value propositions beyond traditional channels also is important, especially since the survey revealed a wide range of media that investors use to identify investing ideas, including social media platforms and increasingly, select participation at investor conferences and quality sponsored research.”

About the 2024 Small Public Company Investor Survey
The online survey was conducted in December 2023 to gauge investor sentiment as it pertains to small public companies valued at $300 million market capitalization and under. Seventy-seven percent of survey respondents categorize themselves as individual investors, followed by institutional investors (11%), family offices (8%) and wealth managers (4%). Four in 10 respondents (42%) have 20+ years of investing experience, followed by 10+ years (28%), 6-10 years (17%) and 1-5 years (13%).

About SNN Incorporated
SNN Incorporated is a global multimedia and publishing financial news investor portal covering the small-, micro- and nano-cap markets by providing news, insights, education tools and expert commentary. Visit https://www.youtube.com/@PlanetMicroCap to subscribe to Planet MicroCap’s YouTube Channel to receive notifications of new CEO interviews, as well as the latest episodes of the Planet MicroCap podcast.

About the Planet MicroCap Showcase
Hosted by SNN Inc., the Planet MicroCap Showcase is an annual 3-day event for the microcap investing community, comprised of company presentations, 1×1 meetings and educational panels. Click here for more information or follow Twitter X and YouTube for important updates.

About PondelWilkinson
Founded in 1968, PondelWilkinson Inc. is a national investor relations and strategic public relations consultancy. The firm represents a wide range of publicly traded, pre-public and privately owned companies, from startups to large caps, and develops programs targeting both Wall Street and Main Street. For more information, visit www.pondel.com. Follow PondelWilkinson on X at @PondelWilkinson or LinkedIn.

As the New Year Rolls In, So Do the Prognosticators

It probably happens every year, but I cannot recall a time when so many pundits had so many opinions on how the market will perform in 2023. The funniest headline about the market’s near-term future was JP Morgan’s, “The End of the Affair.” It probably was written to catch attention, and in my opinion would have been more appropriate a year ago, referring to the bull market prior to last year’s downturn.

How do you think the market will perform in 2023?

Many of the headlines about the new year are positive and include such language as:

  • “Three Scenarios that Could Surprise Markets (on the upside) in 2023”
  • “Is a Stock Rebound in the Cards?”
  • “Inflation will Crash Much Faster than Expected”
  • “Comeback for Fixed Income”
  • “Economy will Avert Deep Recession”
  • “Fed Pivot Could Push Stocks Up by End of Year”
  • “Second Half of Year will be Up, Up and Away”
  • “S&P will Soar at Least 20%, Nasdaq at Least 30%”
  • “Fed will Pause Rate Hikes Sooner than Everyone Thinks”
  • “The Stock Market will have an Excellent Year”

But there also are naysayers:

  • “Wall Street, Meet Mud”
  • “A Strange Day is Coming to America”
  • “More rate hikes are coming”
  • “Stocks will continue their lows in 2023”
  • “Continued Volatility Ahead”
  • “Markets May Continue to Face Choppiness”
  • “Challenges Abound for Dow”
  • “A Stock Market Crash in 2023”
  • “Millionaires Predict the Market Will Get Much Worse”

With so many divergent views, what’s an investor or issuer to think, or more importantly, to do? Who should be believed?

I just counted the number of bullet points above, and there was one more positive than negative. A good sign, although I am not an analyst and my research was cursory at best. However, the sources are good and professional.

If you really want a forecast for 2023, you could always flip a coin.

Friederike Fabritius and Hans Hagemann wrote in in their book, The Leading Brain: Neuroscience Hacks to Work Smarter, Better, and Happier, that if you’re satisfied or relieved by a decision the coin made for you, then go with it. On the other hand, if the coin toss leaves you uneasy, then go with the other choice instead. “Your ‘gut feeling’ alerted you to the right choice,” they wrote.

So please, flip a coin if you will, but at least think positive thoughts. Good luck, and have a healthy, happy and prosperous new year.

Roger Pondel, rpondel@pondel.com

To Buy or Not to Buy, That is the Question

At a time when many stocks are languishing (the Dow is down 3.7% over the last 12 months, the Nasdaq Composite is down 6.9% over the same period and the S&P 500 has lost 8.2%), many investors are asking companies to put their cash to work and initiate stock buyback programs.
 
Is a buyback a good idea?  In 2007, many companies thought so.  According to the Wall Street Journal, companies in the S&P 500 repurchased a record $589 billion of their own stock in 2007, up 36% from the prior year.
 
Buybacks reduce a company’s number of shares outstanding, which in turn helps increase earnings per share.  Company’s stocks often advance on the news of a buy-back, but the effect is generally short-term.  According to a May 2007 article in Forbes, the increase in EPS as the result of a buyback gives only a temporary, one-time, artificial boost to earnings, while causing companies without the proper cash position to increase debt, leaving them vulnerable to a downturn in the economy.  Additionally, a study by Birinyi Associates and cited in the Forbes article showed that of 375 S&P 500 companies that bought back their shares in the six years through December 2006, the companies’ median stock return post-buyback was 56%, versus 72% at companies that did not repurchase their shares. The average return post-buyback was 102%, compared with 131% at companies that did not repurchase.
 
So what’s a company to do now that the economy has turned sour?  Buybacks fell 18% in the 2007 fourth quarter, the biggest quarter-to-quarter drop in more than five years, says the Journal, and given the current credit crunch and fall of the large financials, buybacks are unlikely to reverse this trend in the near-future.
 
If your company’s stock represents a great investment, you have idle cash in the bank and your business can self-fund its growth, a buyback can be a fantastic statement of your future confidence.  However, if you’re considering buying back stock to please a group of critical investors, think hard about whether the cash outlay will introduce unnecessary risk to the business.

 

Laurie Berman, Senior Vice President, lberman@pondel.com