Vladimir Zakharov
Summary
- SA Quant’s Top 5 Small-Caps Ready For A Rally has returned over 20% in two months, beating the market, with four stocks delivering double-digit returns.
- Small caps initially rallied on interest rate cuts, which tend to benefit the sector by reducing borrowing costs and increasing their attractiveness relative to bonds.
- Trump’s recent election victory caused the sector to jump, though small caps have since pulled back, presenting a potential opportunity.
- Since the post-election surge, SA Quant has identified five top Quant-rated small-cap stocks with positive factor grades that are well-positioned to benefit from a long-term rotation into the sector.
- I am Steven Cress, Head of Quantitative Strategies at Seeking Alpha. I manage the quant ratings and factor grades on stocks and ETFs in Seeking Alpha Premium. I also lead Alpha Picks, which selects the two most attractive stocks to buy each month, and also determines when to sell them.
Trump Bump for Small-Caps
The twin forces of the Federal Reserve’s monetary pivot and President Trump’s election victory have caused small-cap stocks to surge to an all-time high in recent weeks. I wrote about small-caps back in September, when the Fed’s rate cut sparked the initial rally. Since publication, the stocks I selected have collectively returned 20.65%, outperforming both the Russell 2000, the benchmark index for smaller companies, and the S&P 500. Four out of five stocks have delivered double-digit returns, with one selection returning over 50%.
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