The Russell 2000 Small Caps ETF Did Not Hit A New High
Market capitalization is the price of the stock times the number of shares. Analysts use it to distinguish between the big stocks and the small stocks. Big stocks like Nvidia, Apple, Amazon and Tesla find their place in the S&P 500 or the Nasdaq 100 or sometimes both.
The market cap for Nvidia is $4457 billion. For Amazon, it's $2374 billion.
The market cap for Credo Technologies, the largest of the small caps, is $20.67 billion. For the fourth largest small cap, Hims & Hers Health, it's $11.74 billion. You can see how it drops off quickly as you move down the list.
Russell 2000 ETF fails to hit a new high
The names of stocks that make up the Russell 2000 are ones you probably haven't heard of. Well, let's put it this way: you MAY have heard of a few but they don't get mentioned much on the front page or in short market updates on the tube. The largest sector within the ETF is financials, mostly regional banks – non-Wall Street hometown variety.
Here's the weekly price chart for the Russell 2000:
The small caps ETF peaked in November 2024 at just above $240. This week's close of near $220 failed to make a new high. Note the decline as indicated by the dotted red line. The divergence between this type of performance and the type for the Nasdaq 100 is a problem for those who remain enthusiastic about stock markets.
Since I mentioned the two largest of the small caps, just for the record, here's how they look.
Credo Technologies:
The semiconductor company specializes in data center technology. This year's earnings are up 129% and up over the past five years by 52%. It's been good to be a tech stock lately, whether large or small cap. The price earnings ratio is 432 (!). The stock trades at 30 times its book value. The debt to equity ratio is .02.
Credo amounts to just .68% of the Russell 2000 ETF, so the largest position is not that much of the total. The stock has gone from near $30 in late March/early April to the present $120, a triple in less than a year. Note that the volume levels peaked in June and have dropped since then.
Hims & Hers Health.
It's a personal and household products company and amounts to .38% of the ETF. Earnings for this year are up 11%. They're up over the past five years by 28%. The price-earnings ratio is 65 and the stock goes for 20 times book value. The short float is a high 32% – showing a greater level of disbelief in this company than for most.
Should those shorts ever be forced to cover that would provide fuel for a rally. Hims & Hers peaked in February at near $72.50 and now trades for $51.94. That's a 28% drop in value in a short time, a possible reason for the short float issue. The company's debt-to-equity ratio is 1.86.
Stats courtesy of FinViz.com. Charts courtesy of Stockcharts.com.
No artificial intelligence was used in the writing of this post.
More analysis and commentary at johnnavin.substack.com.
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