Are smaller-cap stocks due for a rebound? (2024)

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Are smaller-cap stocks due for a rebound? (2024)

FAQs

Will small-cap stocks rebound? ›

In 2024, we expect to see small-caps rebound, and we believe that the companies that meet our investment criteria – quality businesses with strong balance sheets and sustainable metrics, and undervalued relative to peers or the market – may have a strong year.

Are small-cap stocks a good investment now? ›

“According to Wall Street analysts' earnings estimates, stocks on the S&P SmallCap 600 are expected to see a 22.1% rise in earnings in 2025 versus 14.8% for the S&P 500,” he says.

Will small-cap stocks ever catch up? ›

We will see small caps begin to catch up, although this is hard to time. A discounted small-cap valuation argument would have suggested a catch-up was due a year ago. We are still at extreme levels of valuation with the price-earnings ratio of small caps relative to large caps close to the lows of the past 20 years.

Will small-cap stocks do well in 2024? ›

Our 2024 Long-Term Capital Market Assumptions estimate that U.S. SMID-cap equity returns will be robust over a 10-to-15-year investment horizon, even rivalling that of U.S. large caps (albeit with more risk).

Will small caps outperform in 2025? ›

Stocks on the small-cap index are expected to see a 20% rise in earnings in 2025 versus around 15% for the large-cap benchmark, according to FactSet data.

Will small-cap value recover? ›

“Our expectation is that this dynamic will begin to reverse itself later this year as small-cap profits continue to recover via back-end loaded growth in 2024 and into 2025.”

Should I sell my small-cap stocks? ›

Small-cap is not a bad thing, it is just that you should have the time-frame. If you're investing for any 10 year, small-cap will beat all other kinds of funds hands down, but if you are coming with a very short-term expectation, you will be very surprised in a very negative way.

Do small-cap stocks outperform in a recession? ›

From an emotional perspective this feels like a logical investment strategy. The data on investment returns, however, suggests quite the opposite. Investing in small caps during recessions has generated superior investment returns, according to our back-testing of the data to the late 1980s (see Table 1, below).

Is it the right time to invest in small-cap? ›

It's important to consider your risk tolerance and investment goals. If you're comfortable with the potential ups and downs, now might be a good time to explore small-cap stocks. Always do thorough research and consider diversifying your investments to manage risk.

Should I avoid small-cap stocks? ›

It is best to avoid small-cap stocks that have an average trading volume of less than 250,000 shares in the last three months and less than $500 million in market cap. Ensure that the small-cap company caters to a large, growing and quantifiable market.

What is the outlook for small-cap value stocks? ›

Looking forward, we expect value stocks should continue to outperform. Not only are they undervalued, but they also should perform better in an economic environment where we forecast the rate of economic growth will slow sequentially for the remainder of this year and remain sluggish in the first half of 2025.

Do small caps outperform S&P 500? ›

The S&P 500 and NASDAQ 100 outperformed small caps (Solactive 2000) by more than 16% and 18%, respectively. Since the midpoint, however, the tables have turned. Small caps have rallied over 9% compared to just over 2% for the S&P 500, and less than 1% for the NASDAQ 100.

Are small caps going to rebound? ›

Small cap equities are often viewed as a good barometer of regional economic health, and our expectation for 2024 is that they're likely to rebound when interest rates come down later in the year.

Which stock will skyrocket in 2024? ›

Best S&P 500 stocks as of September 2024
Company and ticker symbolPerformance in 2024
Nvidia (NVDA)141.0%
Vistra (VST)121.8%
Howmet Aerospace (HWM)78.6%
General Electric (GE)71.2%
6 more rows

Why are small-cap stocks doing poorly? ›

Several factors have contributed to small-cap underperformance, including (1) a decline in the average quality of companies included in small-cap indexes, (2) the greater rate sensitivity of small-cap stocks during a period of tighter monetary policy, and (3) muted M&A activity, which otherwise tends to benefit small- ...

Is it a good time to invest in small-cap funds? ›

If you're comfortable with the potential ups and downs, now might be a good time to explore small-cap stocks. Always do thorough research and consider diversifying your investments to manage risk.

What happens to small-cap stocks during a recession? ›

The data on investment returns, however, suggests quite the opposite. Investing in small caps during recessions has generated superior investment returns, according to our back-testing of the data to the late 1980s (see Table 1, below).

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