John Bajkowski
is the president of AAII.
The Model Shadow Stock Portfolio’s 13.4% gain in April significantly outpaced the broader market and micro-cap benchmarks, benefiting from a strong rebound in risk appetite and broad participation across smaller-cap equities. The S&P 500 index gained 10.5% during the month, compared to a 7.9% gain for the S&P MidCap 400 index and a 10.4% gain for the S&P SmallCap 600 index.
Smaller-company stocks resumed their market leadership during the month. The S&P SmallCap 600 recorded the strongest breadth statistics across the major capitalization indexes, with 510 advancing issues versus only 93 decliners, producing a very strong 5.48-to-1 Advance/Decline (A/D) ratio. This broad participation provided a favorable backdrop for the Model Shadow Stock Portfolio’s deep-value and cyclical micro-cap exposure.
April’s market leadership reflected a notable continuation of several longer-term trends while also highlighting an important shift in short-term market leadership. Large-cap growth continued to dominate at the index level, with the S&P 500 Growth index rising 14.8% during the month, compared to just a 5.9% gain for S&P 500 Value index. Large-cap growth stocks are up 5.5% year to date, compared to a 5.9% gain for large-cap value stocks.
Mid-cap growth stocks gained 8.1% in April, while mid-cap value stocks gained 7.6%. Mid-cap growth stocks are up 12.3% year to date, compared to an 8.7% gain for mid-cap value stocks.
Small-cap growth stocks gained 11.7% during the month and are up 14.7% year to date, while small-cap value stocks returned 9.2% during the month and are up 13.9% year to date.
Sector leadership aligned well with many of the model portfolio’s strongest performers. Information technology was one of best-performing sectors across all capitalization ranges, surging 23.8% in April and 31.5% year to date in the S&P SmallCap 600. The model portfolio’s top-performing holdings, including Vishay Precision Group Inc. 
(VPG) and Gilat Satellite Networks Ltd. (GILT), benefited from continued investor enthusiasm surrounding industrial technology, aerospace, defense electronics and communications infrastructure. The industrials sector also remained strong, particularly among smaller companies, gaining 11.4% in April and 15.1% year to date in the S&P SmallCap 600. This favorable industrial backdrop helped support strong gains in Covenant Logistics Group Inc. (CVLG) and Mistras Group Inc. (MG).
One of the more notable developments during the month was the divergence within the energy sector across capitalization ranges. Large-cap energy stocks struggled, declining 3.5% amid volatility in oil prices and shifting geopolitical concerns surrounding Iran and the Strait of Hormuz. However, small-cap energy stocks remained positive, gaining 3.9% during the month and leading all sectors year to date with a 48.4% return. This helps explain why the portfolio’s weaker energy holdings, such as NCS Multistage Holdings Inc. (NCSM) and NACCO Industries Inc. (NC), experienced only modest pullbacks despite broader commodity price volatility and still maintained very strong trailing one-year gains.
The breadth statistics also reinforced the strength of the rally beneath the surface. All 11 sectors within the S&P MidCap 400 and S&P SmallCap 600 advanced in April, compared to nine advancing sectors in the S&P 500. The spread between the best- and worst-performing sectors remained extremely wide, particularly among smaller companies, where the performance gap between the top and bottom sectors reached 22.4 percentage points during the month. This dispersion continued to create a highly favorable environment for active stock selection and factor-based micro-cap strategies.
Vishay Precision Group’s strong 39.2% gain was driven primarily by investor optimism about continued strong demand for the company’s precision sensors, which are used in defense-related electronics such as missiles and drones as well as in industrial automation.
Covenant Logistics Group’s 28.4% gain was fueled by its better-than-expected first-quarter 2026 earnings report. Revenue rose 14% year over year, supported by acquisitions and improving freight demand trends in the managed freight and warehousing segments. Although margins remained pressured, management commentary suggested that freight conditions were stabilizing.
Mistras Group gained 27.7% as investors reacted positively to the company’s strong first-quarter 2026 report, which highlighted improving margins, profitability, and demand from aerospace, infrastructure and defense-related inspection markets.
Lakeland Industries Inc. (LAKE) jumped 24.2% as the market was encouraged by strong revenue growth, rapidly expanding fire services operations and improving cash flow trends despite ongoing profitability challenges. This was a meaningful bounce back from the stock’s steep decline over the prior year.
Gilat Satellite continued benefiting from strong investor interest in satellite communications, defense infrastructure and aerospace connectivity markets. The stock was up 22.9% during April and is up 191.2% over the last year.
Collectively, the portfolio’s strongest performers reflected several common themes during the month, including strong demand tied to defense spending, aerospace and satellite communications infrastructure, industrial automation, and improving transportation and infrastructure activity. Investor appetite also remained strong for smaller-cap companies benefiting from long-term structural spending trends and improving operating momentum.
NCS Multistage declined 11.6% as oil prices became increasingly volatile amid shifting geopolitical tensions surrounding Iran and the Strait of Hormuz. Following the stock’s strong prior-year gains, investors appeared to take profits in smaller energy service companies as commodity price expectations became less certain.
NACCO Industries fell 7.3% as investor sentiment toward slower-growth energy and natural resources companies weakened. The company’s exposure to coal-related operations likely limited investor enthusiasm as capital rotated toward higher-growth industrial, technology and infrastructure stocks.
Rocky Brands Inc. (RCKY) fell 5.3% following its first-quarter earnings release on April 28. While direct-to-consumer sales remained strong, investors reacted negatively to weaker wholesale demand, contracting gross margins and concerns surrounding softer consumer spending trends as well as ongoing tariff and sourcing pressures.
Saga Communications Inc. (SGA) declined 3.6% as investor concerns surrounding traditional radio advertising and local-media demand trends continued to weigh on the stock. Investors generally favored companies tied to industrial activity, infrastructure spending and technology-related growth themes over slower-growth communication services businesses.
Ennis Inc. (EBF) declined 2.5% following its quarterly earnings release on April 20. While revenue growth benefited from acquisitions, management noted softer organic demand trends within its printing and business forms operations. Investors appeared to favor more cyclical and higher-growth micro-cap opportunities during the month’s strong market rebound.
The portfolio’s weakest-performing stocks in April were largely tied to areas of the market facing softer demand trends or increased uncertainty, with investors favoring companies tied to defense, infrastructure, technology and industrial growth themes during the month’s strong risk-on rally.
As of May 8, 23 stocks met the initial selection criteria for the Model Shadow Stock Portfolio, compared to 29 stocks one month ago. AAII members can see and research which companies are currently passing the initial selection criteria in the Shadow Stock Ideas table on AAII.com. The list of new Shadow Stock Ideas is updated daily—Tuesday through Saturday.
Of the 23 qualifying companies, six are currently held in the Model Shadow Stock Portfolio: Amplify Energy Corp. (AMPY), Fonar Corp. (FONR), NACCO Industries, NCS Multistage, Regis Corp. (RGS) and StealthGas Inc. (GASS).
Qualifying companies are those held in the Model Shadow Stock Portfolio that currently meet the initial portfolio addition rules. (They are designated as “currently qualifies” in the Notes column of the Model Shadow Stock Portfolio table on AAII.com. However, if you go online, the notes may not match the list discussed here since the notes on the website table are dynamically updated daily.)
Alpha Pro Tech Ltd. (APT), Eastern Co. (EML), Friedman Industries Inc. (FRD) and Park-Ohio Holdings Corp. (PKOH) lost their currently qualifying designation during the month when their price-to-book-value (P/B) ratios edged above 1.00. The Model Shadow Stock Portfolio looks for stocks with a price-to-book ratio of 1.00 or below when adding stocks to the portfolio. Shadow stocks with a price-to-book value three times the initial maximum (1.00 × 3 = 3.00) at the time of a quarterly review are removed from the portfolio, assuming there is a suitable replacement. As of May 8, Gilat Satellite had the highest price-to-book ratio in the portfolio with a value of 2.86, below the 3.00 maximum for removal.
Gilat Satellite also had the highest market capitalization in the portfolio, with a value of $1.467 billion as of May 8. The Model Shadow Stock Portfolio looks for stocks with a market cap (share price times shares outstanding) greater than $30 million but less than $400 million when adding stocks to the portfolio. Shadow stocks with a market cap three times the initial market-cap maximum ($400 million × 3 = $1.2 billion) at the time of a quarterly review are removed from the portfolio, assuming there is a suitable replacement.
Click here to see the current addition and deletion rules for the portfolio.
The next quarterly review of the AAII Model Shadow Stock Portfolio will take place around the beginning of June, after most of the holdings have announced their first-quarter 2026 earnings. Just over half of the portfolio holdings have announced their quarterly results so far. If there are any changes to the model portfolio, they will be announced in the Model Shadow Stock Portfolio Update email. Sign up for this email so you don’t miss it!
(05/07/2026)
Alpha Pro Tech reported first-quarter 2026 diluted earnings of $0.07 per share, up 16.7% from $0.06 per share in the prior-year quarter. Alpha Pro Tech does not have earnings coverage by S&P Global. Net sales were $14.6 million, up 5.5% year over year from $13.8 million. Net income was $702,000, up 14.5% year over year from $613,000. Gross profit margin was 37.8%, down from 39.0% in the prior-year quarter, primarily due to higher-cost tariffed inventory working through the system.
(05/11/2026)
Amplify Energy reported first-quarter 2026 diluted earnings of $0.128 per share, up 32% from $0.097 per share in the prior-year quarter. Earnings were 28.3% above the S&P Global consensus estimate of $0.10 per share. Total revenue was $37.5 million, down from $56.6 million in the prior quarter. Adjusted net income was $5.3 million, up from an adjusted net loss of $10.4 million in the prior quarter. Adjusted EBITDA was $3.8 million, down from the prior quarter. The company reported a free cash flow loss of $18.1 million, down from the prior quarter.
Covenant Logistics Group, Inc. (CVLG)
(04/23/2026)
Covenant Logistics Group reported first-quarter 2026 adjusted earnings of $0.26 per share, down 18.8% from $0.32 per share in the prior-year quarter. Earnings were 7.9% above the S&P Global consensus estimate of $0.241 per share. Total revenue was $307.2 million, up 14.0% year over year from $269.4 million. Net income was $4.4 million, down 32.7% year over year from $6.6 million. Managed freight segment revenue was $90.7 million, up 59.6% year over year, largely driven by assets acquired in fourth-quarter 2025. Earnings fell short of management’s expectations largely due to severe weather shutdowns and fuel cost headwinds earlier in the year.
(04/30/2026)
DMC Global reported a first-quarter 2026 adjusted loss of $0.28 per share, down 354.5% from $0.11 per share in the prior-year quarter. Earnings were 13.8% better than the S&P Global consensus estimate of –$0.325 per share. Net sales were $135.6 million, down 14.9% year over year from $159.3 million. The company reported a net loss of $6.1 million, down from net income of $0.7 million over the same period. Adjusted EBITDA was $3.9 million, down 73% year over year from $14.4 million. The rough quarter for DMC Global is the result of geopolitical headwinds in the Middle East, elevated aluminum costs and tariffs.
(04/20/2026)
Ennis reported diluted earnings of $0.35 per share for its fiscal fourth-quarter 2025 ended February 28, 2026, unchanged the prior-year quarter. Earnings were 7.9% below the S&P Global consensus estimate of $0.38 per diluted share. Revenue was $96.4 million, up 4.2% year over year from $92.7 million. Net earnings were $8.8 million, down 2.0% year over year from $9.0 million.
Ennis ended its fiscal-year 2025 with no debt and $34.6 million in cash. During the year, it returned over $14.5 million to shareholders through share repurchases.
(04/30/2026)
Escalade reported first-quarter 2026 diluted earnings of $0.32 per share, up 68.4% from $0.19 per share in the prior-year quarter. Escalade does not have earnings coverage by S&P Global. Net sales were $55.8 million, up 0.6% year over year from $55.5 million. Net income was $4.4 million, up 67.3% year over year from $2.6 million. EBITDA was $7.1 million, up 44% from $2.2 million over the same period. Escalade acknowledged elevated energy cost as well as broader macroeconomic pressures that could weigh on their company and consumers.
(05/11/2026)
Fonar reported diluted earnings of $0.24 per share for its fiscal third-quarter 2026 ended March 31, down 35.1% from $0.37 per share in the prior-year quarter. Fonar does not have earnings coverage by S&P Global. Total revenues were $26.5 million, down 3.0% year over year from $27.2 million. Net income was $1.6 million, down 34.5% year over year from $2.5 million.
Kimball Electronics, Inc. (KE)
(05/05/2026)
Kimball Electronics reported adjusted diluted earnings of $0.33 per share for its fiscal third-quarter 2026 ended March 31, up 22.2% from $0.27 per share in the prior-year quarter. Earnings were 1.5% below the S&P Global consensus estimate of $0.335 per share. Net sales were $353 million, down 6.0% year over year from $375 million. Management noted that after adjusting for a nonrecurring $24 million consigned inventory sale in the prior-year quarter, total sales rose approximately 1% year over year. Adjusted net income was $8.0 million, up from $6.8 million in the prior-year quarter. Gross margin was 7.9%, up 70 basis points (bps) year over year, driven by favorable mix and lower interest expense.
Lakeland Industries, Inc. (LAKE)
(04/20/2026)
D.A. Davidson upgraded its rating of Lakeland Industries from neutral to buy and raised its price target from $10 to $14 per share. Lakeland Industries closed at $10.83 per share on Monday, April 20, 2026.
(04/16/2026)
Lakeland Industries reported revenue of $45.8 million for its fiscal fourth-quarter 2026 ended January 31, down 1.7% from $46.6 million in the prior-year quarter. The company reported a net loss of $6.2 million, up 66.3% year over year from a loss of $18.4 million. Adjusted EBITDA excluding foreign exchange was $1.3 million, down from $6.1 million in the prior-year quarter, with adjusted EBITDA margin compressing sharply from 13.1% in the prior-year quarter to 2.9%. Gross margin declined from 40.1% in the prior-year quarter to 32.2%, pressured by higher material costs, duties and an unfavorable sales mix. Additionally, headwinds affecting the company can be attributed to freight cost increases, raw material inflation, supply-chain disruptions and shifting U.S. trade policy, including new tariffs.
(05/05/2026)
Mistras Group reported first-quarter 2026 adjusted earnings of $0.08 per share, up from an adjusted loss of $0.01 per share in the prior-year quarter. Total revenues were $169.0 million, up 4.6% year over year from $161.6 million, with North America and international revenue experiencing growth. Gains were driven by growth in the company’s strategic markets. Operating income was $4.7 million, up from a loss of $1.0 million in the prior-year quarter.
Looking ahead to full-year 2026, the company reaffirmed its outlook of revenue between $730 million and $750 million.
(05/05/2026)
NACCO Industries reported first-quarter 2026 diluted earnings of $1.17 per share, up 77.3% from $0.66 per share in the prior-year quarter. NACCO Industries does not have earnings coverage by S&P Global. Total revenues were $62.8 million, down 4.3% year over year from $65.6 million, with revenue growth in the contract mining and minerals & royalties segments. Tons of coal delivered were 5.5 million, down 1.8% year over year from 5.6 million tons. Operating income was $11.0 million, up 43.4% year over year from $7.7 million.
Natural Gas Services Group, Inc. (NGS)
(05/11/2026)
Natural Gas Services reported first-quarter 2026 adjusted diluted earnings of $0.551 per share, up 39.5% from $0.38 per share in the prior-year quarter. Earnings were 25.2% above the S&P Global consensus estimate of $0.44 per share. Total revenue was $48.5 million, up 17.1% year over year from $41.4 million, with growth in rental revenue. Operating income was $13.1 million, up 37.5% year over year from $9.5 million.
In its earnings release, Natural Gas Services declared a regular quarterly dividend of $0.15 per share, a 36% increase from the prior declaration. The dividend is payable on June 3, to shareholders of record as of May 20. The stock will trade ex-dividend on Wednesday, May 20.
Looking ahead to full-year 2026, the Natural Gas Services forecasts adjusted EBITDA of $92.5 million to $97.5 million, up from prior guidance of $90.5 million to $95.5 million.
NCS Multistage Holdings, Inc. (NCSM)
(04/29/2026)
NCS Multistage reported a first-quarter 2026 adjusted loss of $0.14 per share, down from earnings of $1.51 per share in the prior-year quarter. NCS Multistage does not have earnings coverage by S&P Global. Total revenues were $45.6 million, down 8.7% year over year from $50.0 million. The decrease was primarily attributable to lower revenues in Canada, resulting from decreases in market activity as evidenced by lower rig counts and delays in planned customer activity as well as decreased service revenue for international markets, particularly in the Middle East. Operating income was $0.8 million, down 80.2% from $4.3 million in the prior-year period.
Oil States International, Inc. (OIS)
(05/05/2026)
Oil States International reported first-quarter 2026 adjusted diluted earnings of $0.09 per share, up 50.0% from $0.06 per share in the prior-year quarter. Earnings were 5.9% above the S&P Global consensus estimate of $0.085 per share. Total revenues were $145.4 million, down 9.1% year over year from $159.9 million, with only the downhole technologies segment revenue roughly flat year over year. Operating income was $4.3 million, down 24.1% year over year from $5.6 million. Cash on hand exceeded outstanding debt by $4 million at quarter-end.
Pangaea Logistics Solutions Ltd. (PANL)
(05/11/2026)
Pangaea Logistics Solutions reported first-quarter 2026 adjusted earnings of $0.11 per share, up from an adjusted loss of $0.03 per share in the prior-year quarter. Earnings were $0.10 per share above the S&P Global consensus estimate of $0.01 per share. Total revenues were $170.6 million, up 38.9% year over year from $122.8 million, with revenue growth in the voyage, charter, and port terminal & stevedore segments due to supportive market conditions. Operating income was $10.5 million, up from $2.9 million in the prior-year quarter. The company remains focused on growing its shipping and logistics model while upgrading its fleet and driving utilization.
Park-Ohio Holdings Corp. (PKOH)
(05/06/2026)
Park-Ohio Holdings reported first-quarter 2026 adjusted earnings of $0.65 per share, down 1.5% from $0.66 per share in the prior-year quarter. Earnings were in line with the S&P Global consensus estimate. Total revenues were $421.0 million, up 3.8% year over year from $405.4 million, with revenue growth in the supply technologies, assembly components and engineered products segments. Operating income was $19.7 million, up 4.2% year over year from $18.9 million.
Looking ahead to full-year 2026, the company forecasts net sales between $1.675 billion and $1.710 billion, with adjusted earnings of $2.90 to $3.20 per share.
(04/28/2026)
Rocky Brands reported first-quarter 2026 adjusted diluted earnings of $0.24 per share, down 67.1% from $0.73 per share in the prior-year quarter. Earnings were 11.1% lower than the S&P Global consensus estimate of $0.27 per share. Total revenues were $124.4 million, up 9.1% year over year from $114.1 million, with wholesale, retail and contract manufacturing revenue experiencing growth over this period. Operating income was $3.6 million, down 58.2% year over year from $8.7 million. Looking ahead, the company noted that tariff headwinds are expected to ease beginning in the second quarter, with gross margins returning to the low 40% range and profitability improving in the second half of the year.
Saga Communications, Inc. (SGA)
(05/07/2026)
Saga Communications reported a first-quarter 2026 diluted earning loss of $0.38 per share, down from a loss of $0.25 per share in the prior-year quarter. Saga Communications does not have earnings coverage by S&P Global. Total revenues were $22.9 million, down 5.6% year over year from $24.2 million, with no segments experiencing revenue growth. The company reported an operating loss of $3.3 million, down from an operating loss of $2.3 million in the prior-year quarter.
Smith Douglas Homes Corp. (SDHC)
(04/29/2026)
Smith Douglas Homes reported first-quarter 2026 earnings of $0.35 per share, up 16.7% from $0.30 per share in the prior-year quarter. Earnings were 497.6% higher than the S&P Global consensus estimate of $0.059 per share. Total revenues were $206.4 million, down 8.1% year over year from $224.7 million Net new home orders were 981, up 28.0% , while the active community count was 108, up 24.0% at quarter end. Operating income was $4.3 million, down 78.0% from $19.6 million over the same period. The company returned approximately $5.7 million to shareholders through share repurchases during the quarter.
Vishay Precision Group, Inc. (VPG)
(05/12/2026)
Vishay Precision Group reported first-quarter 2026 adjusted earnings of $0.07 per share, flat from the prior-year quarter. Total revenues were $84.4 million, up 17.6% year over year from $71.7 million, with growth in the sensors, weighing solutions and measurement systems segments. Operating income was $340,000, up from an operating loss of $60,000 in the prior-year quarter.
Looking ahead to second-quarter 2026, the company forecasts net revenues in the range of $85 million to $90 million.
Get updates about the portfolio that has outperformed the market by 211.9%
since inception!