© Reuters. 3 Top Small-Cap Stocks to Buy for August
Even with a lower than expected GDP figure, the economic recovery is still in full swing. Small-cap stocks, which have historically outperformed their large-cap peers over the long-term, tend to perform well during economic recoveries. This is why investors should consider small-cap stocks such as Greif Inc. (NYSE:), Inter Parfums, Inc. (NASDAQ:), and Abercrombie & Fitch Company (ANF).As the economy continues to grow, it’s a great time to consider small-cap (short for small capitalization) stocks. A stock is considered a small-cap if it has a market capitalization between $300 million and $2 billion. Often, smaller companies provide opportunities for growth that larger companies cannot.
This is due to the law of large numbers. This means it’s more difficult for larger companies to grow as they get bigger. Plus, small-cap stocks have historically outperformed their larger-cap peers. From December 31st, 2000 to December 31st, 2020, the small-cap index returned 308.4%, significantly outperforming the 184.5% gain of the large-cap S&P 500 index.
Small-cap stocks also benefit from an economic recovery as they are more sensitive to the economy. So far this year, the Russell 2000 is already up 13.6%. This means that as the economic recovery continues, small-cap stocks like Greif Inc. (GEF), Inter Parfums, Inc. (IPAR), and Abercrombie & Fitch Company (ANF) are definitely worth considering.
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