Value should be hard to find as the share market tests its record high. But there’s plenty of value for bargain hunters; the challenge is finding a re-rating catalyst for battered stocks.
Small- and mid-cap stocks are an example. For every soaring tech stock, many others are languishing on almost GFC-like valuation multiples. Small industrial stocks leveraged to Australia’s slowing economy have been forgotten in the momentum-investing craze.
The S&P/ASX Small Ordinaries Index, a barometer of stocks ranked 101 to 300 by market capitalisation, has a total return (including dividends) of 5.6% over one year. The S&P/ASX 100’s total return is almost 15%.