Steve Lipper On Small-Cap Cyclical Stocks—Royce
article 05-29-2019

Steve Lipper On TD Ameritrade Network

Steve Lipper was recently a guest on TD Ameritrade Network’s Morning Trade Live to discuss the current state of small-cap cyclicals.


Senior Investment Strategist Steve Lipper joined host Oliver Renick on TD Ameritrade Network’s Morning Trade Live to discuss why he believes investors are currently overlooking small-cap cyclicals.

Watch Steve’s appearance here.

Steve said that small-cap cyclicals in the Russell 2000 Index are currently cheaper than they were during the fall of 2008 (as measured by EV/EBIT (Ex Negative EBIT)). “That screams to us, ‘excess pessimism’ that people have run to the defensive or non-cyclical part of the market, and sort of left this entire group of stocks,” he said.

Steve added he believes that this is causing investors to overlook opportunities within small-cap cyclicals, noting that small-caps have been up 88% of the time over rolling three-year quarterly periods since World War II. “If companies are continuing to report earnings that are up and their outlooks are up, then the gravitational pull of small-caps, and we think in particular of cyclicals, will be up,” Steve Lipper said.

Watch Steve’s appearance here.

Bio of Steve Lipper

Steve Lipper oversees the production of published research at Royce, including research on the small-cap asset class and Royce's investment strategies. In addition, Steve represents all investment strategies to Royce clients and prospects, including institutional consultants, analysts, financial advisors, and the media. Mr. Lipper joined Royce in 2014 as a Principal and member of our investment and client service teams. He holds a bachelor's degree in Economics from the Wharton School of Business at the University of Pennsylvania. He is a CFA® charterholder.

Important Disclosure Information

The thoughts and opinions expressed in the video are solely those of the persons speaking as of May 29, 2019 and may differ from those of other Royce investment professionals, or the firm as a whole. There can be no assurance with regard to future market movements.

The performance data and trends outlined in this presentation are presented for illustrative purposes only. Past performance is no guarantee of future results. Historical market trends are not necessarily indicative of future market movements.

Cyclical and Defensive are defined as follows: Cyclical: Communication Services, Consumer Discretionary, Energy, Financials, Industrials, Information Technology, and Materials. Defensive: Consumer Staples, Health Care, Real Estate, Utilities.

Sector weightings are determined using the Global Industry Classification Standard ("GICS"). GICS was developed by, and is the exclusive property of, Standard & Poor's Financial Services LLC ("S&P") and MSCI Inc. ("MSCI"). GICS is the trademark of S&P and MSCI. "Global Industry Classification Standard (GICS)" and "GICS Direct" are service marks of S&P and MSCI.

Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and / or Russell ratings or underlying data and no party may rely on any Russell Indexes and / or Russell ratings and / or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication. The Russell 2000 Index is an unmanaged, capitalization-weighted index of domestic small-cap stocks. It measures the performance of the 2,000 smallest publicly traded U.S. companies in the Russell 3000 Index. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index.

This material is not authorized for distribution unless preceded or accompanied by a current prospectus. Please read the prospectus carefully before investing or sending money. Smaller-cap stocks may involve considerably more risk than larger-cap stocks. (Please see "Primary Risks for Fund Investors" in the prospectus.)



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