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The Russell 2000 index, the most common benchmark for small-cap stocks, ended a strong week last week gaining 3% and ending at its highest level in 3 ½ years. Year to date, the small cap index has gained over 7%, just above the YTD returns on Dow Jones Industrial Average [(NYSEARCA:DIA) 6%] and S&P500 [(NYSEARCA:SPY) 5%]. Now that the first quarter is behind us, let’s review the top performers from within the Russell 2000 index as well as highlight a few companies that are likely to outperform sector and index peers.

Figure 1: Year-to-date return of the Russell 2000 index. (Source: Google Finance)

(Click chart to enlarge)

Figure 2: The top performing companies in the Russell 2000 index that helped drive the recent small-cap rally.

Market Cap ($Millions) YTD Return%
Ticker Name Sector
Russell 2000 Top 20 Performers YTD
SRZ SUNRISE SENIOR LIVING INC Health $673 128%
ALJ ALON USA ENERGY, INC. Energy and Extraction $744 125%
SGI SILICON GRAPHICS INTERNATIONAL Technology $649 121%
CIGX STAR SCIENTIFIC INCORPORATED Consumer Non Durable $577 115%
VG VONAGE HOLDINGS CORPORATION Technology $1,010 95%
CPST CAPSTONE TURBINE CORPORATION Capital Goods $445 95%
CLDA CLINICAL DATA, INC. Health $908 91%
BSFT BROADSOFT, INCORPORATION Technology $1,212 88%
DK DELEK US HOLDINGS, INC. Energy and Extraction $738 88%
HERO HERCULES OFFSHORE, INC. Capital Goods $759 82%
SHS SAUER-DANFOSS INCORPORATED Capital Goods $2,465 81%
IPGP IPG PHOTONICS CORP Technology $2,710 81%
PWAV POWERWAVE TECHNOLOGIES INC Technology $760 81%
ICOG ICO GLOBAL COMMUNICATIONS HOLD Technology $677 77%
DSCM DRUGSTORE.COM, INC. Consumer Services $408 74%
PANL UNIVERSAL DISPLAY CORPORATION Consumer Durable $2,143 74%
ROIAK RADIO ONE INCORPORATED Consumer Services $106 72%
ASGR AMERICA SERVICE GROUP INC. Health $238 70%
LNG CHENIERE ENERGY, INC. Utilities $631 70%
AH ACCRETIVE HEALTH, INCORPORATIO Consumer Services $2,632 70%

Now that we have some insight into companies that have led the pack in 2011 it is only right to provide a watch-list of 20 small-cap companies poised to outperform for the remainder of the year according to key metrics used in The Applied Finance Group’s stock selection process.

We looked for firms that meet the following criteria

  • Attractive Valuation
  • Expected to Improve Economic Profitability
  • Wealth-Creating Management Teams
Investment
Ticker Name Sector Opportunity
20 Attractive Russell 2000 Companies to Watch
(NASDAQ:CCIX) COLEMAN CABLE INC Basic Material Attractive
(NASDAQ:NWPX) NORTHWEST PIPE COMPANY Basic Material Attractive
(NASDAQ:ACAT) ARCTIC CAT INCORPORATED Capital Goods Attractive
(NASDAQ:SHFL) SHUFFLE MASTER, INC. Capital Goods Attractive
(NYSE:TGI) TRIUMPH GROUP, INC. Capital Goods Attractive
(NASDAQ:HELE) HELEN OF TROY LIMITED Consumer Durable Attractive
(NASDAQ:HTCH) HUTCHINSON TECHNOLOGY INC Consumer Durable Attractive
(NASDAQ:UEIC) UNIVERSAL ELECTRONICS INC. Consumer Durable Attractive
(AMEX:DLA) DELTA APPAREL, INC. Consumer Non Durable Attractive
(NASDAQ:GIII) G-III APPAREL GROUP, LTD. Consumer Non Durable Attractive
(NASDAQ:WBSN) WEBSENSE, INC. Consumer Services Attractive
(NYSE:CDE) COEUR D ALENE MINES CORPORATIO Energy and Extraction Attractive
(NYSE:IVR) INVESCO MORTGAGE CAPITAL INCOR Financials Attractive
(NYSE:NFP) NATIONAL FINANCIAL PARTNERS CO Financials Attractive
(NYSE:SEM) SELECT MEDICAL HOLDINGS CORP Health Attractive
(NYSE:SKH) SKILLED HEALTHCARE GROUP, INC Health Attractive
(NASDAQ:SOLR) GT SOLAR INTERNATIONAL, INCORP Technology Attractive
(NASDAQ:TTWO) TAKE-TWO INTERACTIVE SOFTWARE, Technology Attractive
(NASDAQ:USAK) USA TRUCK, INC. Transportation Attractive
(NASDAQ:OTTR) OTTER TAIL CORPORATION Utilities Attractive
Source: Russell 2000 at Highest Level Since 2007