Year-to-date, the price return for the S&P/TSX SmallCap Index is 12.9 per cent compared to an 8.6 per cent gain for the S&P/TSX Composite Index. You have to go back to 2020 to find a time when small cap stocks were the leaders. In 2020, the S&P/TSX SmallCap Index rallied 10 per cent versus a gain of just 2.2 per cent for the S&P/TSX Composite Index.
A falling interest rate environment along with a strengthening economy are beneficial to small cap stocks. Many small companies need to borrow money to fund their growth so lower interest rates are supportive. Furthermore, Canadian economic growth is expected to rebound next year. According to Bloomberg, the consensus real GDP forecast for 2024 is 1 per cent, jumping to 1.9 per cent in 2025.
This report includes a link to a list of analysts’ target prices, recommendations, forecast returns and yields for all 246 securities in the S&P/TSX SmallCap Index grouped by sector and ranked according to their expected price returns . The posted target price for each security is an average of all available target prices from analysts.
It’s important to note that high target prices, which imply stellar returns that seem unbelievable may be just that - unrealistic. At times, when a stock price falls analysts may maintain their bullish expectations, inflating the forecast return. In addition, an outlier can skew the average target price, to the upside or downside, particularly when the number of analysts covering a stock is low.
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