Market
strategist
Matt
Orton
sees
promise
in
small-cap
stocks
this
year,
naming
four
under-the-radar
companies
he
is
bullish
on
right
now.
“I
have
been
optimistic
around
small-caps
this
year,
and
it
looks
like
we
could
be
on
the
verge
of
an
even
bigger
breakout,”
Orton,
who
is
the
chief
market
strategist
at
asset
management
firm
Raymond
James
Investment
Management,
told
CNBC’s
”
Squawk
Box
Asia
”
on
April
1.
“Small
caps
certainly
deserve
a
position
in
investor
portfolios
…
Valuation
differentials
with
large
caps
remain
near
historic
levels
and
I
think
we
can
start
to
see
earnings
improve
and
truly
inflect
higher
in 2H24,”
he
added.
Year-to-date,
the
Russell
2000
,
the
benchmark
for
small-cap
stocks,
has
been
up
nearly
5.2%
despite
having
a
tough
start
to
2024.
The
index
came
close
ending
the
first
quarter
at
a
two-year
high
following
a
nearly
30%
rally
off
the
October
lows.
Still,
it
is
over
13%
off
its
all-time
high
from
2021,
Orton
pointed
out.
Small-cap
players
in
the
U.S.
stand
out
as
“very,
very
attractive”
right
now,
he
said,
naming
Vertiv
Holdings
and
CyberArk
as
two
companies
on
his
radar.
Vertiv
Holdings
Vertiv
Holdings
—
a
provider
of
cooling
equipment
and
power
management
products
for
data
centers
—
was
among
Orton’s
top
picks.
Calling
it
a
“really
good
performer,”
he
expects
the
company
to
see
a
pick-up
in
demand
as
more
chips
generating
higher
amounts
of
heat
enter
the
market.
“There’s
a
huge
opportunity
for
increasing
free
cash
flow.
It’s
a
high
margin
business.
And
so
Vertiv,
I
think,
will
continue
to
benefit
from
that,
and
just
gaining
more
and
more
scale
because
there
aren’t
so
many
players
in
the
market,”
Orton
added.
Shares
in
Vertiv
are
up
nearly
471%
in
the
last
12
months.
The
market
strategist
remains
confident
on
the
stock,
noting
that
“just
because
it
is
up,
doesn’t
mean
you
don’t
want
to
own
it.”
Of
the
13
analysts
covering
the
stock,
12
give
it
a
buy
or
overweight
rating,
while
one
has
a
hold
rating,
according
to
FactSet
data.
Analysts’
average
price
target
for
the
stock
is
$77.31,
giving
it
around
5.3%
potential
downside.
CyberArk
The
market
strategist
also
has
his
eye
on
the
cybersecurity
space.
Calling
it
an
“under-looked”
sector
as
a
“huge
consequence”
of
artificial
intelligence,
Orton
believes
there
are
many
opportunities
to
be
explored
as
cyber
threats
and
attacks
against
corporates
and
governments
surface
as
AI
develops.
His
pick
to
play
this
theme
is
information
security
company
CyberArk.
“CyberArk
[serves]
a
niche
—
they’re
focused
on
basically
walled
off
parts
of
enterprises.
So
think
of
specific
company
data
sets,
their
own
cloud
storages,
industrial
processes,
a
lot
of
those
need
specialized
cybersecurity
privileges
and
protections
—
and
that’s
what
CyberArk
provides,”
he
said.
Other
merits
include
“great
earnings
[and
a]
big
opportunity
for
free
cash
flow
expansion
going
forward,”
Orton
added.
Shares
in
Vertiv
are
up
nearly
80%
in
the
last
12
months.
According
to
Factset
data,
of
32
analysts
covering
the
stock,
30
have
a
buy
or
overweight
rating,
while
two
have
hold
ratings.
Their
average
price
target
is
$299.75,
giving
it
12.8%
potential
upside.