Bullish market sentiment is evident in the steadiness of the major benchmark indexes despite Delta variant concerns. The benchmark indices are hovering near record highs on  investors’ optimism about recent federal stimulus and strong corporate earnings. Small-cap stocks have benefited from the current bull run, as evidenced by the S&P SmallCap 600 Index’s 52.4% gain over the past year versus  the broader S&P 500 Index’s 33.2% returns.

Because the U.S economy managed a major recovery from the pandemic-driven recession in the second quarter, investors expect the country to see expansion through the remainder of the year, fueled by fiscal and monetary stimulus.

Small-cap stocks tend to perform well in a booming economy and low-interest-rate environment. Therefore, we think GCP Applied Technologies Inc. (GCP) and HNI Corporation (HNI), which are rated A in our proprietary POWR Ratings system, are solid picks for now.

GCP Applied Technologies Inc. (GCP)

GCP produces and sells specialty construction chemicals and specialty building materials worldwide. The company has a $1.72 billion market capitalization. GCP is based in Columbia, Md.

GCP’s net sales increased 2.8% year-over-year to $222.80 million in its  fiscal first quarter, ended March 31. Its gross profit stood at $86.50 million, up 4.5% from the same period last year. Its cash and cash equivalents balance rose 47.7% from the prior-year quarter to $472.90 million over this period.

A $957.93 million consensus revenue estimate for the current year indicates a 6.1% increase year-over-year. The Street expects the company’s EPS to rise 15.1% from the prior year to $0.84 in the current year. In addition, GCP surpassed the consensus EPS estimates in three out of the trailing four quarters. GCP has gained 4.3% over the past five days to close yesterday’s trading session at $23.44.

GCP has an overall A rating, which equates to Strong Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

GCP has a grade of B for Growth, Stability, Sentiment, and Quality. It is ranked #6 among the 84 stocks in the A-rated Industrial - Services industry.

Click here to view additional GCP ratings for Momentum and Value.

Click here to check out our Industrial Sector Report for 2021

HNI Corporation (HNI)

HNI in Muscatine, Iowa, manufactures and sells workplace furnishings and residential building products in the United States, Canada, China, Hong Kong, India, Mexico, Dubai, Taiwan, and Singapore. The company operates through two segments, Workplace Furnishings and Residential Building Products. It has a $1.66 billion market capitalization.

On May 10, HNI declared a $0.31 per share quarterly dividend on its common stock. The dividend was scheduled to be paid on June 1.

HNI’s net sales increased 22.3% year-over-year to $510.46 million in its fiscal second quarter, ended July 3. Its operating profit grew 66.3% from its  year-ago value to $24.69 million, while its net income improved 38.7% year-over-year to $17.41 million. The company’s EPS has increased 34.5% year-over-year to $0.39.

Analysts expect HNI’s revenues to increase 14.2% year-over-year to $567.20 million in the current quarter, ending September 2021. The $0.80 consensus EPS estimate for the current  quarter indicates a 12.7% rise from the same period last year. Furthermore, HNI surpassed the Street’s EPS estimates in each of the trailing four quarters. HNI has gained 10.8% year-to-date to close yesterday’s trading session at $38.19.

It is no surprise that HNI has an overall A rating, which equates to Strong Buy in our proprietary POWR Ratings system. The stock also has an A grade for Sentiment, and a B grade for Value and Quality. Among the 63 stocks in the Home Improvement & Goods industry, HNI is ranked #1.

To see additional HNI ratings for Growth, Stability, and Momentum, click here.

GCP shares were trading at $23.59 per share on Tuesday afternoon, up $0.15 (+0.64%). Year-to-date, GCP has declined -0.25%, versus a 18.66% rise in the benchmark S&P 500 index during the same period.

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.

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