Small-Cap Stocks Have Gotten Hammered. Why It’s Time to Buy the Dip.

Barrons2021-03-26

Small-cap stocks have taken a beating in the past few days, in an abrupt turnaround from their extended rally. But this quite possibly is a chance for investors to scoop up small-caps ahead of a ...

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Comments

Lucamia
2021-03-29
Lucamia
no short term gains
Lucky03
2021-03-26
Lucky03
Good call
Kaka85
2021-03-26
Kaka85
Hopefully it rebounds
Hungkai
2021-03-26
Hungkai
Like and comment please.
车厘子tomato
2021-03-26
车厘子tomato
comment and like please
- seb59:
  Same same please
beaverknight
2021-03-26
beaverknight
Comment and reply please
- aliciatng:
  thanks
- aesemera:
  done.

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Why It’s Time to Buy the Dip.\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-03-26 16:28 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.barrons.com/articles/small-cap-stocks-correction-russell-2000-51616686761?mod=hp_LEAD_5><strong>Barrons</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Small-cap stocks have taken a beating in the past few days, in an abrupt turnaround from their extended rally. But this quite possibly is a chance for investors to scoop up small-caps ahead of a ...</p>\n\n<a href=\"https://www.barrons.com/articles/small-cap-stocks-correction-russell-2000-51616686761?mod=hp_LEAD_5\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":".DJI","symbol_name":"道琼斯","start_time":0,"source_url":"https://www.barrons.com/articles/small-cap-stocks-correction-russell-2000-51616686761?mod=hp_LEAD_5","article_id":"1197336093","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1197336093","pubTimestamp":1616747282,"sourceInfo":{"source_id":"lsy1601382232898","name":"Barrons"},"weMediaInfo":null,"summary":"Small-cap stocks have taken a beating in the past few days, in an abrupt turnaround from their exten","collect":0,"end_time":0,"defaultTopTitle":"barrons.com","property":[],"viewcount":null,"language":"en","relate_stocks":{".DJI":"道琼斯",".IXIC":"NASDAQ Composite",".SPX":"S&P 500 Index"},"translate_title":"小盘股受到重创。为什么是时候买进低谷了。","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{".DJI":0.9,".IXIC":0.9,".SPX":0.9},"content_text":"Small-cap stocks have taken a beating in the past few days, in an abrupt turnaround from their extended rally. But this quite possibly is a chance for investors to scoop up small-caps ahead of a longer-term rebound.\nThe Russell 2000 has fallen almost 10% from its 2021 high hit just 10 days ago—putting it on pace to enter correction territory.\nSmall-capitalization stocks had been on animpressive run since September, when investors started moving intomore economically-sensitive assetson hopes for an end to the pandemic and the reopening of the U.S. economy—plus trillions of dollars in fiscal stimulus. Economic downturns are a bigger threat to the stability of smaller firms, since they don’t have the same access to capital that larger companies enjoy. And with many small-cap companies focused on the U.S. market, their earnings also tend to be more sensitive tochanges in the domestic economic landscape.\nIn recent days, investors have been repositioning away from cyclical stocksafter the group’s long winning streak, and small-caps have been no exception. While it is anybody’s guess when this pullback will end, small-cap stocks are looking increasingly attractive to some analysts as a result.\n“We prefer small-caps for the year as a whole, would ride out any short-term underperformance,” Lori Calvasina, chief U.S. equity strategist of RBC Capital Markets, wrote in a Wednesday note.\nCurrently, the average market value for theRussell 1000index—which consists of large and smaller capitalization stocks—is about $39 billion. That’s 23 times as large as the average market cap on the Russell 2000, according to RBC data. That metric’s historical average, dating back to 2000, is 21 times. The wider gap between the average market cap suggests that small-caps have more outperformance versus large-caps ahead, especially as they ride earnings momentum from a U.S. economic recovery.\nThe Russell 2000’s technical indicators also point to strength ahead for smaller names. The index dipped below its 50-day moving average on Tuesday, and it “has seen many of its best rallies start after such an occurrence,” wrote Frank Cappelleri, chief market technician at Instinet in a note.\nWithin small-caps, value stocks might be the best subset for buying the dip. Value-oriented companies are typically more mature companies, so their earnings can be more sensitive to changes in the economy than those of fast-growing companies capitalizing on new industry trends.\nOil producerDiamondback Energy(ticker: FANG), which has a market capitalization of $13 billion, is a good example of the opportunity in small-cap value. Its shares have fallen about 15% from the 2021 high hit earlier this month. The stock trades at 9 times forward earnings, a steep discount to the Russell 2000 Value index’s 21.5 times.\nDiamondback stock has been about a third more volatile than the broader market, according to FactSet. That means any gains for larger value names could translate to even more upside to smaller value names like Diamondback. That’s especially true if the price of crude oil can get back to $65 a barrel from the current level of $60. In addition, the company’s earnings are expected to more than double this year, and are forecast to grow almost 30% in 2022, according to FactSet. The stock, however, barely reflects such the earnings momentum ahead: It still trades at less than half the forward earnings multiple it has averaged in the past five years.\nIn order for the broader group of small-cap stocks to regain momentum, however, their valuations have to be tolerable, too. The latest pullback should help with that.\nIn addition, RBC’s Calvasina points out that these stocks already remain “deeply compelling” from a valuation perspective when compared withS&P 500stocks.\n“That valuation recovery is still in the early innings of a recovery off lows last seen in the tech bubble,” she writes.","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":352202067,"gmtCreate":1616975761459,"gmtModify":1704800235305,"author":{"id":"3566218798350603","authorId":"3566218798350603","name":"Lucamia","avatar":"https://static.tigerbbs.com/d0a29de257327dedf4ada72586cf9c09","vip":1,"crmLevel":6,"crmLevelSwitch":0},"htmlText":"no short term gains","listText":"no short term gains","text":"no short term gains","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/352202067","repostId":1197336093,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":356813490,"gmtCreate":1616767915310,"gmtModify":1704798677146,"author":{"id":"3575593817551674","authorId":"3575593817551674","name":"Lucky03","avatar":"https://static.tigerbbs.com/759e5ab6a4a94b481569511ac2bfe116","vip":1,"hat":"https://static.tigerbbs.com/a3dee1aa3a3a3c1814833a4d3f8a5669","crmLevel":1,"crmLevelSwitch":0},"htmlText":"Good call","listText":"Good call","text":"Good call","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/356813490","repostId":1197336093,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":356351888,"gmtCreate":1616758795644,"gmtModify":1704798463735,"author":{"id":"3567602190294873","authorId":"3567602190294873","name":"Kaka85","avatar":"https://static.tigerbbs.com/910cbde97dcc78d3d6264dbe2422fdad","vip":1,"crmLevel":8,"crmLevelSwitch":1},"htmlText":"Hopefully it rebounds","listText":"Hopefully it rebounds","text":"Hopefully it 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please","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/356922835","repostId":1197336093,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":3890083,"gmtCreate":1616750747083,"gmtModify":1680781829114,"authorId":3571385513122234,"author":{"id":3571385513122234,"authorId":3571385513122234,"name":"seb59","avatar":"https://static.tigerbbs.com/1c43d56534d10cf52bf64cfe55f5e6e8","vip":1,"crmLevel":3,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":356922835,"type":1,"supId":0,"prevId":0,"content":"Same same please","text":"Same same please","html":"Same same please"}],"langContent":"EN"},{"id":356963884,"gmtCreate":1616749190948,"gmtModify":1704798301096,"author":{"id":"3573360353525121","authorId":"3573360353525121","name":"beaverknight","avatar":"https://static.tigerbbs.com/f124fbf5afbfe9aba188474f012b46b2","vip":1,"crmLevel":3,"crmLevelSwitch":0},"htmlText":"Comment and reply please","listText":"Comment and reply please","text":"Comment and reply please","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":2,"repostSize":0,"link":"https://ttm.financial/post/356963884","repostId":1197336093,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"comments":[{"id":3892249,"gmtCreate":1616765682245,"gmtModify":1680781862531,"authorId":3572214398550610,"author":{"id":3572214398550610,"authorId":3572214398550610,"name":"aliciatng","avatar":"https://static.tigerbbs.com/c4b23ee891a1061c7907495a9c7da890","vip":1,"crmLevel":3,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":356963884,"type":1,"supId":0,"prevId":0,"content":"<u>thanks</u>","text":"<u>thanks</u>","html":"<u>thanks</u>"},{"id":3889847,"gmtCreate":1616749293696,"gmtModify":1680781821605,"authorId":3576501151089163,"author":{"id":3576501151089163,"authorId":3576501151089163,"name":"aesemera","avatar":"https://static.tigerbbs.com/cdbbdd997dc9db0d9509166c15432fc2","vip":1,"crmLevel":2,"crmLevelSwitch":0,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":356963884,"type":1,"supId":0,"prevId":0,"content":"done.","text":"done.","html":"done."}],"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":29,"commentSize":15,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 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