Small cap stocks, typically defined as companies with market capitalizations between 300 million and $2 billion, are trading at extreme valuation discounts relative to large cap peers as of early 2026. Metrics like forward price to earnings ratio show small caps at around 20 to 30% gap compared to the S&P 500. That's among the widest in decades.To some degree, small caps are cheap for a reason. These companies are often younger, more volatile, and less stable than large caps with higher exposure to economic ...