It might be time to go 'bargain hunting' for small caps stocks, strategist says

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Historically, small cap stocks have performed well around times when unemployment is on the rise.

on the Federal Reserve being done with its interest rate hike cycle. And even after a more than 7.5% increase in the index, RBC capital markets head of US equity strategy Lori Calvasina still sees opportunity as several traditional tailwinds for small caps take hold.

over the past year. The group of stocks has more debt set to mature in the next five years than most large cap companies, which Calvasina said has been a top concern in conversations with investors. Broadly, investors"Unless interest rates reverse lower, interest expense should continue to eat into small-caps' earnings," Ed Clissold, Ned Davis Research chief US strategist, wrote in a research note on Sept. 21.

"To be sure, is creeping up and will continue to rise," Calvasina said. "But we don’t think it’s well understood how much lower the starting point is today relative to past cycles." Warren Buffett's business partner trashed VCs, shared his recipe for success, and pointed out a big difference between Heinz ketchup and Kraft cheese.Stocks eclipsed by massive gains in a handful of mega-cap names could end up driving huge returns for investors in the next decade, a CIO argues.

 

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