Zacks Market Edge Highlights: SPDR S&P 600 Small Cap, First Trust NASDAQ Community Bank, Ultra Clean, PetMed Express and MKS Instruments

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For Immediate Release

Chicago, IL - November 2, 2017 - Zacks Market Edge is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here: ( https://www.zacks.com/stock/news/281124/is-this-a-buying-opportunity-in-small-cap-stocks )

Is This a Buying Opportunity in Small-Cap Stocks?

Welcome to Episode #105 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

In this episode, Tracey is joined by Zacks Director of Research, Sheraz Mian, to discuss the earnings outlook for the small caps stocks, the S&P 600 index.

The small cap stocks have been ignored by most investors as they pile into the large cap Dow Industrials and FANG names like Amazon and Netflix.

As a result, the small cap stocks have underperformed in 2017. The S&P 600, the small cap index, is up about 9% on the year, which, in any other year would be an excellent showing through the month of November. But this year, the S&P 500 is up 14% while the NASDAQ is up nearly 24%.

With returns like those, investors have been shunning the small caps.

Could this present a buying opportunity?

Small Cap Earnings Finally Turning Around

With about a third of the small cap S&P 600 companies already having reported earnings, the earnings picture looks healthier than it has in many quarters.

Sheraz points out that it has been negative in prior quarters but that the future is looking really bright with earnings expected to rise dramatically. 

Analysts are really bullish on 2018, and that's even before there are any corporate tax cuts as the analysts don't take proposed legislation into account when figuring out their numbers.

Corporate tax cuts could light a fire under the mostly domestic small cap companies that have been struggling with earnings growth.

If you're an investor looking for ways to play the small caps going forward, Tracey and Sheraz discuss possible stock and ETFs options.

5 Ways to Play the Small Cap Comeback

1.       SPDR S&P 600 Small Cap ETF SLY captures the entire index. This is a good way to get diversity in a portfolio.

2.       First Trust NASDAQ Community Bank ETF QABA is a good choice for those who want to play the financials, especially the small banks. It's nearly impossible to create your own diverse portfolio of banks so this is a good way to own a basket of them.

3.       Ultra Clean Holdings UCTT has already reported earnings and missed on the quarter but the earnings estimates are still being revised higher. It has a price-to-sales ratio of just 0.9.

4.       PetMed Express PETS is one of the largest online pet pharmacy companies in the United States. Earnings are expected to grow 41% this year. This small cap company also pays a dividend, which is rare for a small cap, yielding 2.2%.

5.       MKS Instruments MKSI beat on the estimate and analysts have been revising their full year outlooks much higher. Earnings are now expected to grow 91% this year. The stock still has attractive valuations, with a forward P/E of 18.

It's not easy to invest in individual small cap stocks as they are so lightly covered and, many times, simply unknown.

Tracey used a screen which included the Zacks Ranks of #1 (Strong Buy) or #2 (Buy) to find these small caps with rising earnings estimates. As always, be sure to research the fundamentals of any company before you dive in.

But with earnings seemingly on the rise, 2018 could be a bright year for the small caps.

What else should you know about buying the small cap stocks?

Find out on this week's podcast.

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Tracey Ryniec manages the Insider Trader and Value Investor portfolios at Zacks.com. She hosts 2 weekly podcasts: Zacks Market Edge Podcast  and the  Value Investor Podcast . You can also catch her on Twitter at  @TraceyRyniec .

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.  This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Ultra Clean Holdings, Inc. (UCTT): Free Stock Analysis Report

MKS Instruments, Inc. (MKSI): Free Stock Analysis Report

PetMed Express, Inc. (PETS): Free Stock Analysis Report


FT-NDQ ABA CBIF (QABA): ETF Research Reports

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Stocks
Referenced Symbols: UCTT , MKSI , PETS , SLY , QABA

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