The Russell 2000 hit 3000 as money rotates from Mag 7. These 10 growth stocks with 20%+ EPS growth are the beneficiaries. Here's what to watch.
The Russell 2000 crossed 3000 for the first time on June 23, extending a 12-month gain of 43%. Chris Harvey of CIBC called the move evidence of a durable trade. Money is rotating out of the Magnificent Seven, he said, into healthcare and banks. Only Apple among the Mag 7 made a new high in June, joined by Eli Lilly as another trillion-dollar stock reaching new highs. The equal-weighted S&P 500 hit a new high last week, Harvey noted, and the Russell 2000 is now following.
Adam Parker of Trivariate acknowledged the skepticism. Many clients are struggling to outperform in small and mid caps, he said, because of specific large names within those indices. Positioning around SanDisk and Micron ahead of index rebalances is a concern. Parker said that while the rotation is real, the index rebalance creates a short-term challenge for some names.
The rotation has lifted a broad set of growth stocks. Granite Construction won a $19 million contract from the Tahoe City Public Utility District to replace aging water infrastructure. The project will install 15,000 linear feet of new water mains and 200 residential water meters. Construction starts in mid-June 2026 and finishes in October 2026. Granite Construction provides infrastructure services to public and private organizations, including airports and municipal agencies. The Tahoe Cedars project replaces pipelines that have operated past their intended service life and is the first year of a planned four-year program.
Hudbay Minerals priced $52 million in municipal bonds to support its Copper World project in Arizona. The bonds carry a 4.50% coupon and a mandatory tender date of July 2, 2036. The offering is expected to close June 24. The bonds are unregistered and available only to qualified institutional buyers. Hudbay produces copper concentrate, molybdenum concentrate, and zinc metal, with Copper World as a key growth asset.
The stocks in this group have grown EPS by at least 20% annually over the past three years and are expected to grow EPS by at least 30% annually over the next five years, according to the screen used for selection. They are also widely held by hedge funds.
Other names in the rotation include Neurocrine Biosciences, Samsara, Alamos Gold, Viavi Solutions, NVIDIA, Eli Lilly, Viking Holdings, and Comfort Systems USA. Eli Lilly carries an Alpha Score of 72, placing it in the Moderate category. NVIDIA scores 65, also Moderate. Samsara scores 29, which is Weak.
Harvey concluded that the trend is working because investors are searching for AI alternatives. Some industrial and consumer data have improved. The focus now is on positioning to avoid downside if AI revenue stocks sell off.
The Russell 2000 closed above 3000 for the first time.
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