After years of underperforming the S&P 500, the Russell 2000 has rallied back strong as investors buy smaller cap stocks to counter the currency headwinds from the strong U.S. dollar. While the Russell 2000 is up 4% year to date, the Merrill Lynch Endeavor list of small caps stocks to buy is up 7.1%, outperforming the index by a stellar 43.66%.

In a new research report, the Merrill Lynch team removes home builder Standard Pacific Corp. (NYSE: SPF) and adds Surgical Care Affiliates (NASDAQ: SCAI) to the portfolio. We screened the current holdings for the higher profile companies to buy and found some outstanding stocks: American Axle & Manufacturing Holdings Inc. (NYSE: AXL), Mentor Graphics Corp. (NASDAQ: MENT), the aforementioned Surgical Care Affiliates and Take-Two Interactive Software Inc. (NASDAQ: TTWO).

American Axle & Manufacturing

After this company posted outstanding fourth-quarter numbers, its stock looks to be on the path for a very solid 2015. It has benefited from the demand for auto parts, and the Merrill Lynch team thinks this pent-up demand has yet to be fully released. They also see expanding diversification in the company’s customer base that could make 2015 earnings and free cash flow strong. It may be a very solid stock to buy before the company reports first-quarter numbers.

The Merrill Lynch price target for the stock is $29. The Thomson/First Call consensus price target is $26.38. Shares closed Wednesday at $24.84.

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Mentor Graphics

This company is a world leader in electronic hardware and software design solutions, providing products, consulting services and award-winning support for the world’s most successful electronic, semiconductor and systems companies. Established in 1981, the company reported revenues in the most recent fiscal year in excess of $1.24 billion.

Mentor Graphics recently announced the new Nucleus SafetyCert real time operating system (RTOS), targeting high-performance, next-generation applications for embedded devices designed to meet safety and reliability regulatory requirements for industrial, medical, and airborne systems. Running in more than 3 billion devices, the high-performance and highly scalable Nucleus RTOS has been verified and documented by Verocel, a leading independent safety-critical software verification company.

Mentor Graphics investors are paid a small 0.9% dividend. The Merrill Lynch price target is set at $30, and the consensus figure is $28.67. The stock closed most recently at $24.33 a share.

Surgical Care Affiliates

As mentioned, this is the newest addition the Endeavor list. The stock was a top health care IPO in 2013 and has moved steadily higher since selling off last fall. The company has benefited and likely will continue to do so from the current trend toward cost cutting in medical practices. The firm’s ambulatory surgery centers are a much less costly alternative to in-house surgery departments for many medical organizations.

The Merrill Lynch price target $40, while the consensus target is currently at $38.33. Surgical Care closed Wednesday at $38.51 a share.

Take-Two Interactive Software

This top video game producer has cashed in with some super-hot titles. The company offers its products under such labels as Rockstar Games and 2K. It develops and publishes action/adventure products under the Grand Theft Auto brand, as well as other franchises, including L.A. Noire, Max Payne, Midnight Club and Red Dead under the Rockstar Games label. The Grand Theft Auto franchise has been one of the best-selling video game series ever released.

The Merrill Lynch price target is a whopping $36, and the consensus target is at $33.56. The stock closed trading on Wednesday at $25.03.

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For aggressive growth investors looking to add smaller cap names to portfolios, these stocks make very good sense. All have solid upside and shouldn’t face extraordinary currency headwinds.

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