After being pummeled in the 2008-09 financial crisis, small-cap stocks have bounced back strong and small-cap valuations have moved back toward normal levels over the past few years. But newsletter guru Jim Oberweis says that, compared to their larger peers, small stocks are still quite attractively valued.
“With valuations no longer at bargain-basement levels, earnings growth will be the driver for high returns,” Oberweis writes in his latest Forbes column. “For companies under $1 billion in market capitalization and with annualized growth rates of 30% or more, the average forward price-to-earnings multiple is now 16.1 — a shade above the 15.6 times earnings for the S&P 500. But you’re paying for faster growth, and it’s actually an unusually small premium to those large-cap stocks.”
Oberweis looks at a handful of small stocks that he’s particularly high on right now. Among them: online postage provider Stamps.com.