Strong Earnings, Fed Interest Rate Report Keep Small Caps Soaring

So much for predictions. A little more than a week after the Wall Street Journal suggested small caps may have topped out, the same reporter hailed a new high for small caps based on the soaring Russell 2000 index. Prompted by a slew of good earnings reports and  the Federal Reserve’s suggestion that no interest rate hikes are on the immediate horizon, the Russell index of small cap stocks on April 27 set a new record of 858.31, breaking a high set back in 2007, according to the WSJ.

With large caps, the Nasdaq, the Standard & Poor’s stock index, gold and silver soaring as well, portfolio managers were quoted in the WSJ as predicting that the Fed’s comments gave confidence to investors “to take stocks to levels we haven’t seen in three years.”

They noted that some of the stocks that make up the Russell index “have seen their share price multiply by 50 times or more,” particularly the stocks that were hit hardest by the recession and are now potential takeover targets. High-flying examples include Tulsa-based Dollar Thrifty Automotive Group (NYSE:DTG), which has jumped 96-fold since March 2009 and Ft. Worth-based Pier One Imports (NYSE:PIR), which has increased 81 times.

Also continuing to rise during the week were the three stocks that SmallCapWorld cited in our last post as having possibly topped out: American Axle & Manufacturing (NYSE:AXL) moved from $12.24 to $12.80; Select Comfort Corp (Nasdaq: SCSS) went from $13.27 to $15.87 and Keryx Pharmaceuticals (Nasdaq:KERX) moved from $5.04 to $5.29.

How long can all this last? One portfolio manager suggested it should last long past the June wrap up of QE2, perhaps for the entire year. Just for curiosity sake, we took a look at a few of the stocks that were this blog’s best performers for 2010 to see how they are faring in the bull market of 2011.

Scotts Valley, CA-based VirnetX Holding Corp. (Amex: VHC,, a developer of software and technology for securing real time security solutions over the Internet, closed out 2010 at about $15. It closed Friday, April 29 at a whopping $25.35.

Bellevue, WA, Radiant Logistics (OTCBB:  RLGT,, a global transportation and supply chain management company, was about $1.18 at the start of 2011. It closed April 29 at $1.45.

Wilmington, OH-based Air Transport Services Group (Nasdaq: ATSG,, a provider of aircraft, airline operations and other related services primarily to the shipping and transportation industries, was $7.84 at the start of the year. It closed April 29 at $8.18.


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