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Roth MKM sees opportunities in small-cap stocks

Published 03/07/2023, 16:44
© Reuters.

Roth MKM analysts told investors in a note Monday that the firm sees opportunities in small-cap companies.

"It is great to be average in small caps," declared O'Hara, adding that he believes investors "should not ignore the opportunities" in the bracket.

"The S&P 500 ended the week and the month with all sectors in the green. This was needed for breadth expansion. History shows years that have strong first halves typically see upside momentum continue in the second half. The one knock on the market is the underperformance of small caps, specifically the Russell 2000," the analysts wrote.

"While the index has dramatically underperformed the S&P 500, we have found the “average” stock is doing just fine and is faring better than the average S&P 500 stock year to date."

The analysts clarified that the firm's call is not to completely abandon large-cap technology and fully rotate into the small-cap space. However, they find "compelling evidence of a catch-up trade from small cap technology after losing ground to its large cap counterpart for years."

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