Small caps to grow at a multiple of the ‘Magnificent Seven,’ says Richard Bernstein
Small caps are poised to see massive gains over the next few months, according to Richard Bernstein of Richard Bernstein Advisors.
“The reason, I think, that we’re such big bulls on mid-caps and small caps is that that’s where the earnings growth is forecasted to be,” the firm’s CEO and chief investment officer told CNBC’s “The Exchange” on Monday. “By the end of this year [or] early next year, we’re going to find that small caps … are going to grow at a multiple of what, say, the ‘Magnificent Seven’ are going to grow at.”
He added that while this small-cap performance is not particularly unusual in a trough, it is unusual for it to be happening when the Federal Reserve is “actually easing into this accelerating profits environment” rather than tightening.
“As profits rev up, we should see, normally, the economy just gets stronger, naturally,” he continued. “Now we’ve got the Fed easing on top of that. That’s like putting fuel on the fire.”
When looking at deglobalization as a key investment theme, Bernstein anticipates that midcap industrial stocks that have a focus on the U.S. economy in particular will be the “big growth beneficiaries.”
“As globalization contracts, we have to realize that it’s not just semiconductors that open up the United States to national security implications,” he said. “It’s the fact that we don’t produce anything here in the United States. That’s basically what our trade deficit shows. We think that presents a tremendous opportunity.”
— Sean Conlon
Stocks making the biggest moves after hours
Check out the companies making headlines in extended trading:
- Snowflake — Shares of the data cloud company fell 3% after Snowflake announced a proposed private placement of $2 billion of convertible senior notes.
- AAR — The defense stock rose nearly 4%. In the first fiscal quarter, AAR reported adjusted earnings of 85 cents per share, up 9% from the year-ago period. Revenue came in at $661.7 million, up 20% from the prior year.
The full list can be found here.
— Hakyung Kim
Stock futures open little changed
U.S. stock futures were flat Monday night.
Dow Jones Industrial Average futures slipped just 23 points, or 0.05%. Futures tied to the S&P 500 and Nasdaq 100 inched down 0.06% and 0.1%, respectively.
— Hakyung Kim
