Bank of America is getting more optimistic on an economic recovery — and it believes the biggest winners in the inflection period could be small-cap stocks. The firm's U.S. Regime Indicator was in the downturn phase for six months, but showed an improvement in July. Further advancement in August would officially mark a shift to an early-cycle recovery. Historically, this is the best phase for small caps, according to strategist Jill Carey Hall.
mountain Urban Outfitters shares Dental products supplier Patterson Companies also made the list of promising small-cap names as the economy begins an inflection stage. Four-fifths of analysts covering the stock give it a hold rating, and the average price target suggests only 5.3% upside potential. The stock has added 20% year to date. —CNBC's Michael Bloom contributed to this report.