As concerns over trade wars escalate, investors may find refuge in small-cap stocks, which have been handily beating the broader market this year. That outperformance should not be hindered by the deterioration of trade relations and the consequent volatility in the U.S. dollar, as small caps have a much lower sensitivity to trade risks. Lower exposure to trade risk along with beneficial tax policy exposures, relative strength in U.S. economic growth, and potential merger activity, make small caps like GrubHub Inc. (GRUB), Exact Sciences Corp. (EXAS) and Aspen Technology Inc. (AZPN), especially attractive in the currentꦫ environ🅺ment, to CNBC.

Small Caps vs. Big Caps

The outperformance of small caps has largely been due to the effects of tax cuts and regulatory reform, with smaller companies receiving double the𝓰 amount of tax-cut benefits than were received by large companies during the first quarter. Looking ahead, the full effects of the tax cuts have yet to be completely reflected in small-cap stock prices. As domestic-oriented companies are likely to receive a greater share of the extra consumer sp🐼ending dollars from individual tax cuts than global-oriented companies, expect outperformance to continue.

The still-growing U.S. economy in the midst of forecasts of weaker growth and tighter financial conditions in Europe and emerging markets will also provide more exclusive benefits to small domestic-oriented companies, to CNBC. (To read more, see: 澳洲幸运5开奖号码历史查꧅询:US Stocks May Stage R𒈔ebound Amid Warnings Signs.)

Small caps, as potential takeover targets, could also get a boost from increased M&A activity. The repatriation of cash by large multinational companies following the tax cuts is 🐭expected to be used, at least in part, for such deals. Adding the reduced concern over regulations that might have prevented such deals, the rising of a large M&A wave is a strong possibil𝔉ity.

GrubHub, an online food ordering service, beat expectations in this year’s first quarter on a 72% increase in the number of its diners and several key acquisitions, Yelp Inc.’s food delivery platform Eat24, Foodler Inc. and OrderUp. Aspen Technology has been riding higher on a number of 澳洲幸运5开奖号码历史查询:earnings surprises over the past year, with as m📖uch as an 82.5% around this time la♛st year.

Small Caps Leading the Charge

The 澳洲幸运5开奖号码历史查询:Russell 2000 index, which t✤racks the performance of approximately 2,000 small-cap stocks, is far outpacing the S&P 500’s 3.5% rise with a more than 11🌸% gain on the year, and it continues to reach new highs that fuel optimism of a continuing bull market.

“You’ll never see a bear market start with the Russell 2000 hitting an all-time high,” Peter Costa, a governor at the New York Stock Exchange, CNBC around the middle of last month. (To read more, see: Small Caps in Rܫussell 2000 Break Out to Fresh Highs.)

B. Riley FBR’s Art Hogan made a prediction around the same time Costa gave his remarks that he sees the Russell 2000 r𒆙ising another 5.4% to hit 1,800 by the end of the year, , “This is a trade that’s got legs.”