Value in small caps?

Citigroup, in a recent research report written by analyst Tony Brennan, says investors should be looking for value in the small caps universe. "One natural further place to look is in small caps, given the pronounced underperformance of the small cap indexes in recent years. Underperformance is not a certain indicator of value by any means, often on the contrary, but it may also be at times a sign of unduly difficult conditions that are likely to pass." However, small industrials "may be under-earning and offer more value than their price-earnings ratios imply." Brennan highlights 4 stocks that look “interesting” and also have “buy” recommendations: Super Retail, Sky City Entertainment, Flexigroup, McMillan Shakespeare. (Source: AFR)


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