An undiscovered universe of stocks is trading at 'near generational lows,' asset manager says

Meta and its revenue and earnings growth is set to drive a positive push for stocks on Thursday, with tech giants Amazon.com and Intel to report after the bell.

“Today is a particularly attractive entry point for small-cap stocks around the world. Despite rising over 80% since the depths of COVID, the MSCI World Small Cap Index is at a near 20-year low current [price/earnings] of 11.9x,” Pzena told clients in a note. “Additionally, global small-cap stocks are also trading at near generational lows relative to global large-cap stocks.”

They say part of that outperformance is due to a lack of transparency, as smaller companies tend to attract less attention from brokers and research analysts —28% of those stocks are followed by three or fewer analysts, versus 2.4% for large caps. Of course the small cap universe also has three times as many names as the mid/large cap bunch, notes the investment management firm.

Oh and if a recession is coming, some research points to the better shelter from small caps over large-cap rivals. Schroders took a look at performances by smaller companies globally stretching back to the late 1980s that showed investing in the asset class during recessions drove strong returns. The 40-year period encompasses recessions across the U.S., Europe and Asia:

The markets Stock futures ES00 YM00 are higher, led by the tech-focused Nasdaq 100 NQ00 , with Treasury yields TMUBMUSD10Y TMUBMUSD02Y up and the dollar DXY steady. Gold GC00 and silver SI00 are also leaning higher.For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

First-quarter gross domestic product and weekly jobless claims are due at 8:30 a.m., followed by pending home sales at 10 a.m.

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