Is Vera Therapeutics Inc. (VERA) will be the best-traded small-cap stock in 2024?

We recently created a list 10 best performing small cap stocks in 2024. In this article we will look at where Vera Therapeutics Inc. (NASDAQ:VERA) is among the best-performing small-cap stocks in 2024.

The case of small caps

The recent Fed interest rate cut made the market cautiously optimistic. Despite the unusual moment, historical data indicate a continuation of the upward trend. We recently discussed the Dow’s new all-time high. The main stock index recently surpassed its previous high, closing at a record high. This sharp increase was the result of a combination of factors, including positive investor sentiment following the central bank’s interest rate cut and broader economic optimism. These record results reflect the strong upward trend in the market, indicating strong investor confidence and favorable economic prospects.

Here is a fragment of the article regarding 10 best performing stocks in 2024: :

“The Dow Jones Industrial Average recently made headlines by closing above 42,000 for the first time, a significant milestone reflecting increased investor confidence following the Fed’s significant interest rate cut. This momentous achievement occurred on September 19, when the Dow jumped over 500 points to close at 42,063.36. The increase was part of a broader stock market trend that saw major indexes post broad gains for the week, largely driven by optimism surrounding the Fed’s decision to cut interest rates by 0.5%.

On September 21, Edward Yardeni, president of Yardeni Research, while admitting that the market tends to constantly grow, also discussed the warning signs of a collapse in the context of the markets’ reaction to the September interest rate cut in the CNBC Dzwonek’ “Closing” program. He doubted the need for such a large rate cut, suggesting that the economy is currently growing at around 3% year-on-year and could potentially grow even faster. Yardeni noted that while productivity gains are expected to become more pronounced soon, he would prefer to see the market stabilize for some time rather than continue its upward trend.”

Richard Bernstein, CEO of Richard Bernstein Advisers, joined CNBC’s “The Exchange” on September 24 to provide insight into the performance of small-cap stocks. He noted that while small-cap companies are performing well, they have not kept pace with more speculative investments such as cryptocurrencies, which have seen strong gains. Bernstein expressed concern that the trend could signal to the Fed that its liquidity measures may have been excessive because funds are not being directed toward productive uses in the economy.

He explained his bullish stance on mid- and small-cap stocks, emphasizing that these categories are expected to see significant earnings growth. Bernstein forecasts that small-cap stocks will grow at a much higher rate than technology stocks MAG 7 by the end of this year or early next year. He emphasized that this phenomenon is typical when earnings cycles bottom out; Small-cap companies tend to be more sensitive to improving profitability and have noticed that the Fed’s current easing policy is occurring simultaneously with rising earnings, an unusual combination that can fuel economic growth.

When asked about current market dynamics favoring large-cap companies over smaller ones, Bernstein admitted that many managers do gravitate toward larger companies. However, he cautioned that from a fundamental investment standpoint, large-cap stocks generally grow slower and are more expensive compared to other market segments. He argued that historically, a combination of cheaper and faster-growing stocks has proven beneficial to investors.

Bernstein also discussed the implications of rising gold prices and cryptocurrency behavior in the wake of the Fed’s recent actions. He distinguished between gold and cryptocurrencies, suggesting that while gold has legitimate economic uses, cryptocurrencies often do not perform productive economic functions. He expressed concern about speculative fervor in the market, arguing that excessive inflation in financial assets could be as harmful as inflation in real assets. This misallocation of capital can lead to inflationary pressures as resources are diverted from key sectors such as infrastructure to less productive areas such as cryptocurrencies.

Overall, Bernstein’s insights reflect cautious optimism for small-cap stocks amid broader market trends. Therefore, we are here with a list 10 best performing small cap stocks in 2024.

Methodology

We used stock screeners to find companies trading between $1 billion and $10 billion – our definition of a small-cap stock. We then selected the 10 stocks that had the best year-to-date performance and were also the most popular among elite hedge funds. Stocks are listed in ascending order by their year-to-date performance.

Why are we interested in stocks that hedge funds invest in? The reason is simple: our research has shown that we can outperform the market by imitating the best stocks of the best hedge funds. As part of our quarterly newsletter strategy, we select 14 small- and large-cap stocks every quarter, and since May 2014, we have returned 275%, beating our benchmark by 150 percentage points (Smore details can be found here).

Vera Therapeutics Inc. (NASDAQ:VERA)

Year-to-date performance as of September 23: 185.18%

Market capitalization as of September 23: $2.40 billion

Number of hedge fund holders: 43

Vera Therapeutics Inc. (NASDAQ:VERA) is a clinical-stage biotechnology company focused on developing treatments for immune and inflammatory diseases that aim to improve the lives of patients suffering from diseases such as lupus and myasthenia gravis. The mission is to develop innovative treatments that address unmet medical needs in the field of immunology.

The company’s Atacicept, a promising treatment for IgAN and lupus nephritis, is showing significant progress in clinical trials. With Atacicept being designated a Breakthrough Therapy by the FDA earlier this year, Atacicept may soon be available to patients, potentially revolutionizing the treatment of these conditions. Positive data from the ORIGIN trial suggest that Atacicept is effective in reducing IgAN markers, providing hope for better outcomes.

For the second quarter of 2024, it reported a loss per share of $0.62 compared to $0.46 in the same period last year. The net loss for the period was $33.7 million, higher than the net loss of $20.2 million in the second quarter of last year, primarily due to high operating costs related to research and development activities. As of June 30, 2024, the company had cash of $384.4 million, which it believes will be sufficient to fund operations through the potential approval and launch of Atacicept in the U.S. (top line expected in Q2 2025). .

It expects to report data from the 96-week ORIGIN trial in the fourth quarter of 2024 and complete patient enrollment in the pivotal ORIGIN 3 trial by the third quarter of 2024. The pivotal data from the ORIGIN 3 trial is expected in the second quarter of 2025, which could lead to approval by regulators of Atacicept as a potential first-in-class B-cell modulator for IgAN.

As the company focuses on developing treatments for autoimmune diseases, it is also developing MAU868, a monoclonal antibody against BKV, a threat to kidney transplants. The company owns all global rights to both MAU868 and Atacicept.

Vera Therapeutics Inc. (NASDAQ:VERA) has strengthened its executive team with the appointment of David Johnson as chief operating officer. This strategic move allows the company to effectively develop its pipeline of medicines and prepare for potential commercialization, positioning it to become an industry leader.

Overall VERA ranks 10th on our list of top-performing small-cap stocks for 2024. While we recognize VERA’s potential as an investment, our belief is based on the belief that AI stocks hold great promise in delivering high returns, and in a shorter period of time. If you’re looking for AI stocks that show more promise than VERA but are trading at less than 5 times their earnings, check out our report on cheapest AI stocks.

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Disclosure: None. This article was originally published on Insider Monkey.