4 Small-Cap Growth Stocks To Invest In

Decline in oil prices and China led weak global growth worries had weighed on the key U.S. indexes during the start of this year. However, a recovery in oil prices and encouraging economic data, mainly on the domestic front, helped benchmarks to rebound strongly in the latter half of the first quarter. Both the Dow and the S&P 500 have gained 3.3% and 2.5%, year to date, respectively. Meanwhile, the small-cap heavy Russell 2000 index surged 13.1% in trailing three months.

Though small cap stocks are considered to be high-risk investment options given their low market cap, investing in small cap growth stocks could be a profitable proposition at this time. Markets are stabilizing and economic data has been mostly favorable. Moreover, the CBOE Volatility Index (VIX) has declined 26.7% year to date to nearly 13, indicating that volatility in the U.S. markets remains low. For investors with high risk appetite and return expectations, small cap growth stocks are the best bet given the current market environment.

Oil Price Rally

After reaching multi-year lows on Feb 11, oil prices have made a remarkable comeback on the back of favorable production forecasts and a continuous decline in oil rig counts. Since Feb 11, the prices of WTI and Brent crude have jumped 51.4% and 42.7%, respectively.  Though a much-vaunted meeting between the major oil producing countries in Doha regarding production freeze failed to produce favorable results on Sunday, its impact on crude was lesser than expected.

Moreover, non-OPEC oil supply continues to decline, borne out by the fall in U.S. output. On Monday, the Energy Information Administration (EIA) reported a fall in U.S. crude output by 90,000 bpd to 9 million bpd in March. The EIA also reduced its production forecast from last month’s outlook by 100,000 bpd to 8.6 million bpd and 8.0 million bpd in 2016 and 2017, respectively.

Also, following an oil worker strike in Kuwait, its oil production fell from almost 3 million barrels per day (bpd) to 1.1 million bpd on Sunday. This played an important role in curbing most of yesterday’s crude price decline. Meanwhile, last Friday, Baker Hughes (BHI - Analyst Report) reported a drop in U.S. oil rig count for the fourth straight week from 354 to 351, its lowest level since Nov 2009.

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