Which small-cap stocks remain attractive amid market turbulence? Morgan Stanley provides a reference list
In the market turmoil triggered by President Trump's large-scale tariff increases, U.S. small-cap stocks have fallen for three consecutive trading days. As of Monday's close, the Russell 2000 Index, which is primarily composed of small-cap stocks, has dropped about 26% from its peak in December last year. Morgan Stanley believes that the performance of small-cap stocks is expected to further lag behind that of large-cap stocks, partly due to their higher exposure to macroeconomic uncertainties, and analysts have been continuously lowering earnings per share expectations for small-cap stocks. However, Morgan Stanley added that there are still some small-cap stocks worth considering. Michael Wilson, a U.S. equity strategist at the firm, stated in a report: "Even so, beneath the surface, there are still many opportunities in small-cap stocks." The firm noted that both historically and in the first quarter of 2024 to 2025, small-cap stocks with good return on equity (ROE) and growth momentum have performed well. The firm's analysts screened small-cap stocks with positive ROE and momentum over the past 12 months and rated them as "overweight" or "hold." Below are some of the stocks with a market capitalization of at least $5 billion:
According to the Zhitong Finance APP, amid the market turmoil triggered by U.S. President Trump's large-scale tariff increases, U.S. small-cap stocks have fallen for three consecutive trading days. As of Monday's close, the Russell 2000 index, which is primarily composed of small-cap stocks, has dropped about 26% from its peak in December last year. Morgan Stanley believes that the performance of small-cap stocks is expected to further lag behind that of large-cap stocks, partly due to the former's higher exposure to macroeconomic uncertainties, and analysts have been continuously lowering earnings per share expectations for small-cap stocks. However, Morgan Stanley added that there are still some small-cap stocks worth considering.
Michael Wilson, a U.S. equity strategist at Morgan Stanley, stated in a report: "Even so, beneath the surface, there are still many opportunities in small-cap stocks." The firm noted that both historically and in the first quarter of 2024 to 2025, small-cap stocks with good return on equity (ROE) and growth momentum have performed well. The firm's analysts screened small-cap stocks with positive ROE and momentum over the past 12 months and assigned "overweight" or "hold" ratings. Below are some of the stocks with a market capitalization of at least $5 billion:
