Small caps are the only part of the market that remains historically inexpensive (BoA)











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(Boursier.com) — Extreme discount between small and large growth stocks? For the Bank of America teams, the answer is clearly positive since they do not hesitate to speak of a “particularly extreme” discount. According to the strategists, small caps are globally the only part of the stock market that remains historically cheap: “in our opinion, they are already anticipating a recession”.

Although S&M growth stocks are getting cheaper, BofA advises clients to stick with value stocks. Both value and growth have had mixed performance during recessions, but the bank still prefers value stocks to growth stocks for 2023.

“The relative multiple of the Russell 2000 Growth to the Russell 1000 Growth is now 29% below the historical average, across the metrics we track; this compares to a 22% discount to the historical average between small caps ‘value’ and large caps ‘value'”.

Energy and financials are two of the most attractive sectors among value small caps, BoA teams point out.


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