Updated on May 17th, 2018
The Russell 2000 Index is the world’s best-known benchmark for small cap domestic stocks. It is composed of stocks ranked 1,001 to 3,000 in terms of descending market capitalization.
Small cap stocks have historically outperformed their larger counterparts. Accordingly, the Russell 2000 Index can be an excellent place to look for new investment opportunities. You can download a spreadsheet with all Russell 2000 stocks below.
The Russell 2000 Index List available for download at the link above contains important information for each of the 2000 stocks in the index, including:
- Stock price
- Dividend yield
- Price-to-earnings ratio
- Price-to-book ratio
- Beta
- Market Capitalization
- Return on Equity
Keep reading this article to learn more about how to use the Russell 2000 Index List to find compelling investment ideas.
How To Use The Russell 2000 Stocks List To Find Investment Ideas
Having an Excel document that contains financial information on each Russell 2000 stock can be tremendously useful.
This document becomes far more powerful when combined with a knowledge of how to manipulate data within Microsoft Excel.
With that in mind, this article will provide a tutorial on how to implement two actionable investing screens to the Russell 2000 Stocks List.
The first screen that we’ll implement is for stocks trading at price-to-earnings ratios below 15 and price-to-book ratios below 1.5. These stocks are trading at very attractive valuations and should avoid the valuation risk that accompanies investing in overpriced securities.
Screen 1: Value Stocks
Step 1: Download the Russell 2000 Stocks List at the link above.
Step 2: Click on the filter icon at the top of the price-to-earnings column, as shown below.
Step 3: Change the filter setting to “Less Than” and enter “15” into the field beside it, as shown below.
Step 4: Close out of the filter window (by clicking on the exit button, not by clicking on the “Clear Filter” icon in the bottom right of the window). Then, click on the filter icon at the top of the price-to-book column, as shown below.
Step 5: Change the filter setting to “Less Than” and enter 1.5 into the field beside it.
The remaining stocks in this spreadsheet are Russell 2000 stocks with price-to-earnings ratios below 15 and price-to-book ratios below 1.5.
The next screen we’ll show you to implement is for Russell 2000 stocks that pay dividends and have returns on equity exceeding 15%.
Screen 2: Dividend-Payers With High Returns on Equity
Step 1: Download the Russell 2000 Stocks List at the link above.
Step 2: Click on the filter icon at the top of the dividend yield column, as shown below.
Step 3: Change the filter setting to “Greater Than” and enter “0” into the field beside it, as shown below.
Step 4: Exit out of the filter window (by clicking on the exit button, not by clicking on the “Clear Filter” button in the bottom right of the window). Next, click the filter icon at the top of the return on equity column, as shown below.
Step 5: Change the filter setting to “Greater Than” and enter 0.15 into the field beside it. This will filter for Russell 2000 stocks with returns on equity exceeding 15%.
The remaining stocks in this spreadsheet of dividend-paying stocks with returns on equity exceeding 15%.
You now have a solid understanding of how to use the Russell 2000 stocks list to find investment ideas.
The remainder of this article will briefly describe the merits of investing in the Russell 2000 Index before explaining other resources that you can use to find investment ideas.
Why Invest In Stocks From The Russell 2000 Index
As mentioned previously, the Russell 2000 Index contains the domestic U.S. stocks that are ranked 1,001 through 3,000 in descending market capitalization. The Russell 2000 is an excellent benchmark for small-cap stocks; at the time of this writing, the average market capitalization within the Russell 2000 is about $1.2 billion.
Why does this matter?
Small-cap stocks have historically outperformed large-cap stocks for two reasons.
First of all, small-cap stocks tend to grow more quickly than their larger counterparts. There is simply less competition and more room to grow when your market capitalization is, say, $1 billion when compared to $100 billion.
Secondly, many small-cap securities are outside the investment universes of most institutional investment managers. This creates less demand for shares, which reduces their prices and creates better buying opportunities.
For this reason, there are typically far more mispriced investment opportunities in a small-cap index like the Russell 2000 than a large-cap index like the S&P 500. Investors with a value orientation should keep this in mind when searching for their next purchase opportunity.
Final Thoughts
The Russell 2000 Index List is an excellent place to look for small-cap investment opportunities. However, it is not the only place where excellent investments can be found.
If you’re looking to large-cap exposure to stable stocks with solid dividend growth prospects, the following databases will prove more useful than the Russell 2000 Index List:
- The Dividend Aristocrats List: S&P 500 stocks with 25+ years of consecutive dividend increases
- The Dividend Achievers List: dividend stocks with 10+ years of consecutive dividend increases
- The Dividend Kings List: with 50+ years of consecutive dividend increases, the Dividend Kings are the “best-of-the-best” when it comes to dividend longevity
- The Blue Chip Stocks List: dividend stocks with 100+ year operating histories and 3%+ dividend yields
Alternatively, you may be looking for dividend stocks that come from a certain sector of the stock market.
If that is indeed the case, the following stock databases will be useful:
- The Complete List Of All Dividend-Paying Utility Stocks
- The Complete List Of All Dividend-Paying Healthcare Stocks
- The Complete List Of All Dividend-Paying Consumer Staples Stocks
- The Complete List Of All Dividend-Paying Financial Sector Stocks
- The Complete List Of All Dividend-Paying Energy Sector Stocks
- The Complete List Of All Dividend-Paying Technology Stocks
- The Complete List Of All Dividend-Paying Consumer Cyclical Stocks
- The Complete List Of All Dividend-Paying Telecommunication Stocks
- The Complete List Of All Dividend-Paying Materials Stocks
- The Complete List Of All Dividend-Paying Industrial Stocks
Another method to find investment ideas is to look inside the portfolios of the world’s most successful investors.
With that in mind, the following Sure Dividend database (updated quarterly) will be useful: