For the past three years, the debate on Wall Street has revolved around whether investors are better off chasing the Magnificent Seven stocks or if they should get into defensive stocks for a crash that is yet to fully materialize. Small-cap stocks have been mostly ignored, and that trend has continued so far into this year as well.
That said, the Magnificent 7’s momentum is cooling off. Year-to-date, Roundhill Magnificent Seven ETF (BATS:MAGS) is down 4%, whereas the S&P 500 has turned positive at 1.23%.
Small-cap stocks are now worth looking into before Wall Street dives deeper into the market for more growth in the coming years. Not only that, penny stocks and small-cap stocks in general have done very well during a rate cut cycle. Goldman Sachs expects three rate cuts in the next 18 months, so now could be a good time to buy. Here are three that can outpace the big caps.
This post originally appeared at Money Morning.