In today’s stock market, small-caps are punching up as large-caps have lagged behind

You might be surprised to hear that small-cap stocks are trading inexpensively compared with their larger peers. Indeed, they are — if the data are confined to profitable companies.

In an interview, Timothy Skiendzielewski, co-manager of abrdn’s $2.6 billion U.S. Small Cap Equity Strategy, discussed six smaller companies that he argues are set up for long-term growth. They are listed below. And the small-cap group is expected to increase earnings more quickly than the large-caps. Stripping out unprofitable companies from the Russell 2000 index, Jefferies analyst Steven DeSanctis estimates small-cap companies will increase their 2021 earnings by 42% from their pre-COVID 2019 levels, while the S&P 500, on the same basis, will increase earnings by 26%.

He also sees the current environment as one that is especially good for active managers seeking overlooked long-term plays among small-cap stocks, which may only be covered by few Wall Street analysts.For the six stocks he mentioned during the interview, here are three tables showing sales and earnings estimates, and then a summary of Wall Street analysts’ opinions.

For the sales growth calculations, the table includes three-year expected compound annual growth rates, based on consensus estimates through 2024 for the first two companies — Health Catalyst and Conmed. For Grid Dynamics, CI Financial and Graphic Packaging , consensus sales estimates are available through 2023, so the table includes two-year sales CAGR. For Aritzia, full-calendar-year sales estimates are available only through 2022, with analysts expecting an increase of 18.6%.

Source: News Formal (newsformal.com)

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