Goldman Sachs believes there are opportunities in small-cap stocks, despite the Russell 2000 ending its worst week since January. Greg Tuorto, manager of the Goldman Sachs Small Cap Core Equity ETF (GSC), is optimistic that easing financial conditions will benefit the group. However, he suggests being cautious and selective when investing in small caps, as things can change quickly. Tuorto advises looking beyond the benchmark small-cap index to identify high-quality companies, with Federal Signal Corp., SPX Technologies, and Core & Main being top holdings in his fund.
Although the Russell 2000 had a losing week, it is still up nearly 2% for the year, while Goldman’s ETF has outperformed the index, up nearly 8% in the same period. Tuorto believes that the interest rate sensitive group is preparing to catch up with expected easing by the Federal Reserve. He points to the semiconductor industry as a potential area for small-cap growth, particularly highlighting Cohu and Onto Innovation as top picks.
Tuorto also sees potential in consumer-facing stocks, citing strong consumer spending. He mentions restaurants like Shake Shack and Cava as examples of companies with solid management and strong customer loyalty strategies. Overall, he remains optimistic about the prospects for small-cap stocks, especially as financial conditions continue to improve.
Goldman Sachs believes that there are opportunities in small-cap stocks, despite the Russell 2000 experiencing its worst week since early January. Greg Tuorto, who manages the Goldman Sachs Small Cap Core Equity ETF (GSC), believes that easing financial conditions will benefit the group. However, he advises being selective in small caps, as they can be volatile. Tuorto suggests looking beyond the Russell 2000 index to find high-quality names. Federal Signal Corp., SPX Technologies, and Core & Main are among his fund’s top holdings. He warns that there are many unprofitable companies in the index, but smaller companies in the $2 to $5 billion range can offer strong potential.
Despite the recent losses, the Russell 2000 is still up almost 2% for the year, while Goldman’s ETF has outperformed, gaining nearly 8% in the same time frame. Tuorto believes that small caps are poised for a comeback, especially with expectations of easing by the Federal Reserve. He sees potential for the semiconductor industry to provide opportunities for small caps, highlighting Cohu and Onto Innovation as top picks in the space. Tuorto also believes that consumer-facing stocks, such as Shake Shack and Cava, could continue to outperform due to strong consumer spending. He praises the management of these companies for their focus on loyalty and efficient real estate management.
Overall, Goldman Sachs sees potential in small-cap stocks, with opportunities for growth in various sectors such as semiconductors and consumer-facing industries. Tuorto advises investors to be selective in their choices and look for high-quality companies within the small-cap universe.
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