Seeking Alpha

Small caps get even pricier

  • "We start to get a little queasy when we hit 19x," says BAML's Steven DeSanctis, unable to find bargains in any sector of the small cap universe.
  • The Russell 2000 is up 29% this year, and 5.4% over the three months, easily cruising past the S&P 500's 21% and 2.7% gains, but the small cap's P/E ratio has risen to just over 18 vs. a long-term average of 14.9.
  • The lofty valuation has BAML recommending clients swap out of U.S. growth for global growth as small caps generally have less exposure to international action.
  • Small cap ETFs: IWM, VTWO, EWRS, SRTY, TWM, RWM, TNA, URTY, UWM, TZA, SMLV, TWOKIWO, VTWG, UKK, SKKIWN, VTWV, UVT, SJH.
Comments (1)
  • IV Investor
    , contributor
    Comments (6) | Send Message
     
    Russell 2000 P/E is actually 32x. 18x P/E is if you exclude companies with losses. P/E of 32 is extremely high.
    21 Oct 2013, 02:40 PM Reply Like
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