Is It Time to Bet on Small Caps? Analysts Share Insights On The Valuation Gap Versus Large Caps
Portfolio Pulse from Piero Cingari
The relative value of small-cap stocks compared to large-cap stocks is at its lowest point in over two decades. The price ratio between the iShares Russell 2000 ETF (IWM) and the SPDR S&P 500 ETF Trust (SPY) has decreased by more than a third in the last year and a half. George Bonne, an equity research analyst at MSCI Inc., noted that small-cap stocks have started to display lower forward P/E ratios compared to large-cap stocks. However, the valuation gap may further widen due to high interest rates.
October 21, 2023 | 1:29 pm
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POSITIVE IMPACT
Apple Inc. is part of the 'Magnificent Seven', a group of stocks that have shown an 85% increase year to date.
The strong performance of Apple Inc. and the other stocks in the 'Magnificent Seven' could potentially lead to an increase in the price of AAPL in the short term.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 50
POSITIVE IMPACT
Amazon Inc. is part of the 'Magnificent Seven', a group of stocks that have shown an 85% increase year to date.
The strong performance of Amazon Inc. and the other stocks in the 'Magnificent Seven' could potentially lead to an increase in the price of AMZN in the short term.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 50
POSITIVE IMPACT
Alphabet Inc. is part of the 'Magnificent Seven', a group of stocks that have shown an 85% increase year to date.
The strong performance of Alphabet Inc. and the other stocks in the 'Magnificent Seven' could potentially lead to an increase in the price of GOOG in the short term.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 50
POSITIVE IMPACT
Alphabet Inc. is part of the 'Magnificent Seven', a group of stocks that have shown an 85% increase year to date.
The strong performance of Alphabet Inc. and the other stocks in the 'Magnificent Seven' could potentially lead to an increase in the price of GOOGL in the short term.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 50
POSITIVE IMPACT
Meta Platforms Inc. is part of the 'Magnificent Seven', a group of stocks that have shown an 85% increase year to date.
The strong performance of Meta Platforms Inc. and the other stocks in the 'Magnificent Seven' could potentially lead to an increase in the price of META in the short term.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 50
POSITIVE IMPACT
Microsoft Corp. is part of the 'Magnificent Seven', a group of stocks that have shown an 85% increase year to date.
The strong performance of Microsoft Corp. and the other stocks in the 'Magnificent Seven' could potentially lead to an increase in the price of MSFT in the short term.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 50
POSITIVE IMPACT
NVIDIA Corp. is part of the 'Magnificent Seven', a group of stocks that have shown an 85% increase year to date.
The strong performance of NVIDIA Corp. and the other stocks in the 'Magnificent Seven' could potentially lead to an increase in the price of NVDA in the short term.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 50
POSITIVE IMPACT
The SPDR S&P 500 ETF Trust (SPY) has seen its price ratio compared to the iShares Russell 2000 ETF (IWM) increase significantly, indicating a higher valuation for large-cap stocks.
The increase in the price ratio between SPY and IWM indicates a higher valuation for large-cap stocks, which could potentially lead to an increase in the price of SPY in the short term.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100
POSITIVE IMPACT
Tesla, Inc. is part of the 'Magnificent Seven', a group of stocks that have shown an 85% increase year to date.
The strong performance of Tesla, Inc. and the other stocks in the 'Magnificent Seven' could potentially lead to an increase in the price of TSLA in the short term.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 50
NEUTRAL IMPACT
George Bonne, an equity research analyst at MSCI Inc., provided insights on the underperformance of small-cap stocks compared to large-cap stocks.
The insights provided by George Bonne could potentially influence investor sentiment towards MSCI Inc., but it's uncertain how this will affect the company's stock price in the short term.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
NEGATIVE IMPACT
The iShares Russell 2000 ETF (IWM) has seen its price ratio compared to the SPDR S&P 500 ETF Trust (SPY) decrease significantly, indicating a lower valuation for small-cap stocks.
The decrease in the price ratio between IWM and SPY indicates a lower valuation for small-cap stocks, which could potentially lead to a decrease in the price of IWM in the short term.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100
NEGATIVE IMPACT
The Invesco S&P 500 Equal Weight ETF (RSP) has shown a negative 3% increase year to date.
The negative performance of RSP compared to the other stocks and ETFs mentioned in the article could potentially lead to a decrease in the price of RSP in the short term.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 50