FYI: Wall Street’s wild ride has shined a light on a segment of the stock market that is often forgotten: midcap stocks.
Considered less risky than their small-cap counterparts, midcaps—which typically have a market capitalization between $2 billion and $10 billion—are now less expensive than smaller and larger peers after the stock market’s punishing fourth-quarter selloff.
The S&P MidCap 400 index trades at 14.4 times projected earnings over the next 12 months, down from 18.2 times at the end of 2017, according to FactSet. In comparison, the S&P 500 and the SmallCap 600 trade at 15.2 and 15.4 times forward earnings, respectively.
“Midcaps are the orphaned index,” said Mark Fried, president of TFG Wealth Management, which has $100 million in assets under management. “When we sit down with clients and look at their 401(k)s, it’s one of the areas that we see the least used, but it should be a part of it. Now is a good opportunity since that part of the market is down.”
Regards,
Ted
https://www.wsj.com/articles/midcap-stocks-try-to-shed-the-orphaned-index-label-1154773000010 Year Annual Return:
S&P 400:
13.40%
S&P 500:
12.13%
(Source: S&P Dow Jones Indices)
