Small Cap Stocks Have Been Lifted by Unprofitable Companies. Can They Continue Climbing?
Update: 2025-10-31
Description
Unprofitable small-cap companies in the Russell two thousand index have surged by nineteen percent this year, double the growth of profitable peers, driving the index to outperform the S and P five hundred. Investors are betting on interest rate cuts to boost earnings growth, but concerns arise as riskiest, unprofitable companies soar the most. Despite Federal Reserve Chair Jerome Powell's cautious stance on rate cuts, analysts predict more cuts, keeping energy high in the sector. Experts argue that small-caps could finally outpace large-cap counterparts, with attractive valuations and predicted earnings growth of over twenty-five percent by next year. However, risks remain, including shaky job numbers and mixed consumer confidence.
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