The Fed’s signal that it will begin to cut asset purchases this year indicates solid progress in the economic recovery. This, coupled with the projected continuation of the short-term low interest rate environment, we believe the backdrop is favorable for fundamentally solid small-cap stocks USANA Health (NYSE :), EnPro Industries (NPO), Marcus & Millichap (MMI)), Hollysys Automation (NASDAQ 🙂 and Standex International (NYSE :). Therefore, it might be advisable to bet on these actions now. Major benchmarks and the S&P 500 closed at an all-time high on Friday after Fed Chairman Jerome Powell noted that the central bank would begin lowering its bonds this year. In addition, the central bank does not intend to raise short-term interest rates. The Fed believes the economy is recovering with a significant improvement in employment and record GDP growth. This, along with the expected continuation of the low interest rate environment, should benefit small-cap stocks.
Investor interest in small-cap stocks is evident in iShares Core’s 4.5% ETS Core S&P Small I Cap (IJR) yields over the past month compared to 2.6. % of the ETS Core S&P 500 ETF (IVV).
We believe that the expanding market reach of small-cap companies USANA Health Sciences, Inc. (USNA), EnPro Industries, Inc. (NPO), Marcus & Millichap, Inc. (MMI), Hollysys Automation Technologies Ltd. (HOLI) and Standex International Corporation (SXI) should help them capitalize on rising consumer demand in a recovering economy. Therefore, its shares are expected to produce solid returns in the coming months.
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