Three empirical reasons small-caps set to outperform in 2024 by as much as 50%. R2K EPS growth +690bp faster but trades at a 41% P/E discount. Feb Core PCE (Fri) likely below consensus = good

The video in this report is only accessible to members
The video in this report is only accessible to members
The video in this report is only accessible to members
The video in this report is only accessible to members

VIDEO: There is a trifecta of factors supporting small-cap outperformance in 2024 and we detail the fundamental case for small-caps in this video (duration: 3:26).

The video in this report is only accessible to members
The video in this report is only accessible to members

Recently, I was a panelist at an investment conference (thank you, Stephanie Link, for inviting me) and a snarky panelist, a hedge fund manager, started to ridicule the idea of buying small-caps. To me, this was a confirmation signal that small-caps are so disdained - that a wrong-way-Charlie type can be so confident small-caps will not work. 

Our top idea for 2024 is small-caps, where we see at least 50% upside, and in today's note I want to provide the 3 empirical (and fundamental) reasons for this:

First, the Russell 2000 ($IWM) companies are set to grow revenues and EPS faster than the S&P 500 ($SPY), by a large margin in 2025 (vs 2024)- R2K vs S&P 500- median sales +6.9% vs +5.5%- true at every quintile of sales (see below)- median EPS growth +18.6% vs +11.8%- true at every quintile of EPS (see below). The faster sales and EPS growth may surprise many pundits who view smaller cos as growing slower. The drivers for this are sustainable:- Fed is easing = improved credit liquidity- ISM is bottoming = cyclical up...

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