The Russell 2000 Index contains stocks that feature smaller capitalization, some of which seem attractive if you consider certain valuation metrics. For example, right now it’s possible to find companies within the index that have almost no debt to speak of and which continue to pay reasonable dividends.
There’s a lot else to look at when analyzing such stocks but it’s a good beginning if they’d don’t owe a lot of money and if investors are treated with the courtesy of a dividend every quarter. These 2 metrics alone can help to prevent serious portfolio mistakes, although no guarantees are possible.
4 Russell 2000 Stocks: Little Debt and Dividend-Paying.
Cal-Maine Foods. The farm products outfit has a market capitalization of $2.46 billion. The Nasdaq-traded company has no debt on the books, long-term or otherwise, something you don’t find too often.
This year’s earnings are off by 86.90%. For the past 5-years, earnings have shown growth of 42.95%. Cal-Maine pays a dividend of 1.95%. The stock trades with a price-earnings ratio of 3.88 at 1.53 times book value.
The weekly price chart shows how Cal-Maine has recently climbed back above the 50-week moving average (the blue line).
Essent Group is a Bermuda-based insurance company (serving the housing market) with a market cap of $5.15 billion. This NYSE-listed firm has a debt-to-equity ratio of just .09. Earnings for this year are down by 15.73% and, over the past 5 years, up by 14.13%.
The price-earnings ratio is 7.75 and the price-to-book value ratio is 1.07, the kind of metrics which make it likely to be showing up on the screens of value investors. Essent Group pays a 2.07% dividend.
The stock remains above both the 200-week moving average and above the 50-week moving average.
Richardson Electronics makes, guess what, electronic components — with a focus on microwave needs. It has a market capitalization of $195.71 million which definitely fits it into the small cap category.
The company, headquartered in LaFox, Illinois, has a price-earnings ratio of 12.25 and trades at 1.22 times its book value. Its debt-to-equity ratio is .01. This year’s earnings are declining by 77.70%. The past 5-years shows earnings growth of 34.54%.
Richardson shareholders receive a 1.73% dividend.
After a serious decline from late 2022 to September, 2023, the stock appears to be finding some strength again.
Weyco Group based in Glendale, Wisconsin, is in the shoe-making business and offers classic name-brands like Florsheim and Nunn Bush. It’s another “definitely small cap” with a market capitalization of just $282.82 million.
Earnings over the past 5 years show growth coming in at a 13.92% pace. The company’s debt-to-equity ratio is .05. The price-earnings ratio is 8.92 and it trades at 1.20 times book. Weyco is paying a dividend of 3.33%.
It trades above the 200-week moving average for all of 2023 and now trades strongly above the 50-week moving average.
Stats courtesy of FinViz.com.