Small-caps offer an intriguing opportunity set at an uncertain time. Rate cuts could benefit smaller firms, but geopolitical and policy challenges remain, as well. For investors who want to get exposure to that category and diversify away from concentration risk, then, what options can appeal? A quality small-cap ETF like OUSM could stand out, having crossed the $1 billion AUM threshold this week, per ETF Database data.See more: This Underrated Tech ETF Is Spiking Amid Rate Cut HypeThe O’Shares U.S. Small-C ...

After a long period of underperformance, small-cap U.S. stocks may be staging a comeback. While it's too early to say for sure whether this is the start of a sustained rally or just an occasional rise, recent data shows encouraging signs for small-cap investors.Small-cap exchange-traded fund iShares Russell 2000 ETF (IWM) has gained 6.3% over the past month (as of Sept. 3, 2025) versus about 2% gains in SPDR S&P 500 ETF Trust (SPY) . However, IWM still lags SPY when the year-to-date performance is considere ...

Core Viewpoint - The Russell 2000 has experienced a significant rebound of nearly +9% in the last month due to favorable macroeconomic conditions, including potential interest rate cuts and clearer tariff policies, which are expected to enhance investor sentiment towards small-cap U.S. companies [1]. Company Summaries Cars.com (CARS) - Cars.com stock is currently priced at $12, which is 40% below its 52-week high of $20. The company has faced challenges due to high interest rates, inflation, and tariffs impacting consumer demand for vehicles [2]. - Earnings estimates for Cars.com have seen slight upward revisions for fiscal years 2025 and 2026. The stock trades at 7X forward earnings, with EPS expected to increase by 4% this year and projected to rise by 32% in FY26 to $2.35. The Average Zacks Price Target of $17.17 indicates a potential upside of nearly 35% [3]. OppFi (OPFI) - OppFi is priced at $10 and has gained over +30% year-to-date, yet remains 40% below its 52-week high of $17. Analysts maintain a bullish outlook, with an Average Zacks Price Target of $14 suggesting a 36% upside [8]. - The stock trades at 7X forward earnings, with FY25 EPS expected to increase by 49% to $1.49. Recent revisions have shown a 15% increase in FY25 EPS estimates following strong Q2 earnings results. Annual earnings are projected to rise by 4% in FY26 to $1.48 per share, supported by sales projections exceeding $600 million [9][10]. Quad Graphics (QUAD) - Quad Graphics is trading at $6, just above penny stock status, and is a provider of commercial printing solutions. The Average Zacks Price Target suggests a potential return to its 52-week peak of $9 [12]. - The company is profitable and trades at 6X forward earnings. EPS revisions have increased, forecasting a 13% rise in FY25 and a further 15% increase in FY26 to $1.11 per share. Additionally, Quad Graphics offers a 4.5% annual dividend yield [13][14]. Conclusion - The favorable macroeconomic environment is expected to accelerate growth for these companies, making them attractive investment opportunities within the Russell 2000 [15].

Small-cap stocks are starting to gain momentum after a rough stretch https://t.co/IX155S0uD7 ...

Group 1 - Small-cap stocks have been largely overlooked but may see a resurgence due to favorable market conditions [1][2] - The Russell 2000 index produced an 11.5% total return in 2024, underperforming the S&P 500, which returned 25% [1][2] - The valuation gap between small-cap and large-cap stocks is at its widest in 25 years, with small caps trading at a P/B ratio of 1.8 compared to the S&P 500's 4.9 [4][5] Group 2 - The Federal Reserve's anticipated interest rate cuts, which are expected to total five over the next year, could benefit small-cap stocks significantly [6][7] - Lower interest rates are favorable for small caps due to their higher reliance on debt and the potential influx of investment as risk-free rates decline [7] - The regulatory environment under the previous administration may have provided small caps with competitive advantages [8] Group 3 - There is a bold prediction that the Vanguard Russell 2000 ETF could rise by 50% over the next 12 months, contingent on favorable market conditions [4][9] - Despite the challenges, small-cap stocks are expected to deliver excellent long-term returns, making it a potentially opportune time for investors to consider [9]

Core Insights - Small-cap stocks present a significant growth potential compared to large-cap stocks, as many large-cap stocks began as small caps [1] - Falling interest rates are expected to benefit small-cap stocks disproportionately due to their higher reliance on debt, potentially lowering borrowing costs and attracting investment into more speculative companies [2] - Investing in small-cap stocks can be challenging, making index funds like the Vanguard Russell 2000 ETF a viable option for exposure [3] Valuation Analysis - There is a notable valuation gap between small caps and large caps, with small caps trading at their lowest price-to-book valuations relative to large caps since the late 1990s [5] - As of the current analysis, the average stock in the Russell 2000 trades at 1.8 times book value, while the average S&P 500 component trades at 5.0 times book value, indicating a significant disparity [6] - The earnings growth of large caps, particularly in the tech sector, has not been sufficient to justify the large valuation gap [6] Investment Strategy - Accumulating shares of the Vanguard Russell 2000 ETF is a strategy being employed to capitalize on the potential for small-cap outperformance in a falling interest rate environment [7]

Analyst's Disclosure:I/we have a beneficial long position in the shares of EVER either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any in ...

Core Insights - The S&P 500 is attempting to establish stability at new all-time highs, prompting a strategy shift towards overlooked small-cap stocks with better valuations [1] Group 1: Market Strategy - The current investment strategy involves rotating out of winning momentum trades and focusing on small-cap stocks that are undervalued [1] Group 2: Analyst Background - Gary Alexander has extensive experience in technology sectors, having worked on Wall Street and in Silicon Valley, and has advised seed-round startups [1] - He has been a contributor to Seeking Alpha since 2017 and has been featured in various web publications, with his articles reaching popular trading platforms like Robinhood [1]

After lagging behind large-cap peers for the past two years, small-cap stocks may finally be poised for a breakout in the second half of 2025. With interest rate cuts potentially on the horizon, improving macroeconomic conditions, and attractive relative valuations, institutional investors are beginning to rotate into this overlooked segment of the market. One of the most reliable telltales of opportunity in small caps is insider and institutional buying. When executives and directors put their capital to w ...

Market Overview - The broader market has improved significantly as fears over geopolitical tensions and slowing economic growth ease, shifting sentiment back to "risk-on" [1] - Selective small-cap stocks are seen as offering exceptional upside opportunities, particularly those with strong growth forecasts and favorable valuations [1] The ONE Group Hospitality (STKS) - The ONE Group Hospitality operates upscale restaurant brands and is benefiting from a renewed appetite for in-person dining, indicating a shift away from "peak takeout" [4] - The company has transitioned from negative to positive earnings, with current year earnings projections rising from a loss of -$0.31 to a gain of $0.51, and next year's forecast increasing from -$0.08 to $0.69 [5] - STKS has a Zacks Rank 1 (Strong Buy) and trades at a forward earnings multiple of 9.3x, with expected EPS growth of 20% annually over the next three to five years [5] - The stock chart shows a promising technical setup, having built a solid base and formed a bullish continuation pattern, with key support at $4.70 and resistance at $5.13 [6] Legacy Education Inc. (LGCY) - Legacy Education Inc. operates in healthcare education and workforce development, focusing on training for high-demand medical roles, making it somewhat recession-resistant [8] - The company has strong momentum, holding a Zacks Rank 2 (Buy) and trading at a forward earnings multiple of 17.1x, with sales expected to rise by 37.9% this year and another 16.9% in 2026 [9] - Following a recent breakout to new record highs, LGCY is forming a technical bull flag, with a potential confirmation above the $11 level [10] Investment Outlook - Both The ONE Group Hospitality and Legacy Education Inc. are highlighted as compelling investment opportunities, supported by strong earnings growth forecasts, reasonable valuations, and improving technical setups [13] - These small-cap stocks are positioned to be early leaders in a broader small-cap resurgence, making them worthy of close attention for investors seeking growth stories with breakout potential [14]