Small-cap stocks are some of the biggest winners at the moment.

Since August 2017, the Dow Jones Industrials are up 5%.  The NASDAQ is up 7%.  And the S&P 500 is up 6%.

Yet, the Russell 2000 has skyrocketed 12% to 1,513, showing no sign of slowing.

All thanks in part to President Trump’s renewed push for major corporate tax cuts by the end of December 2017.  According to Reuters:

While businesses of all sizes would likely benefit if Congress lowers the corporate tax rate from 35% to 15% as President Trump has proposed, small companies would see the greatest improvement to their bottom lines. Companies in the benchmark Russell 2000 of small-cap companies pay a median effective tax rate of 31.9%, while the larger, multi-national companies in the S&P 500 pay a median effective tax rate of 28%, according to Thomson Reuters data. So far, the effects of a major tax bill are not fully priced into the market, said Martin Jarzebowski, portfolio manager of the $593 million Federated Clover Small Cap Value fund, leaving the Russell 2000 sensitive to news out of Washington.

One of  the many stocks benefiting from the run is USA Technologies (USAT).

When we first recommended the stock, it traded at just $1.59 in December 2009, $1.23 in December 2011 and again at $1.58 in November 2013.  Now at $6.50 a share, the stock has returned potential gains of 309%, 311% and 428%.

In fact, the company, which assists with cashless transactions, is likely to continue growing, as the global community goes cashless.  Right now, more than a third of Europeans and Americans would be happy to go without cash and rely solely on electronic forms of payments if they could, notes Reuters. Already, up to 20% are doing so.

So it came as no surprise that the company is still achieving record revenues.

Fourth quarter 2017 revenue of $34.28 million crushed a year-earlier report of $21.94 million. Net income shot from a loss of $872,000 to a profit of $243,000.  Net income per share bounced from a year-earlier ($0.02) to $0.01.

As we noted in the October 2017 issue of The Cheap Investor, “If the company maintains its growth trend, the stock should continue to move up.”

This is just another clear example of why profitable small cap stocks deserve a spot in your portfolio.