The
steady
underperformance
of
small-
and
mid-capitalization
stocks
appears
to
be
nearing
an
end
after
bouncing
back
this
month,
according
to
BMO
Capital
Markets.
Since
the
start
of
the
year,
the
S
&
P
MidCap
400
index
and
S
&
P
SmallCap
600
index
have
added
8.2%
and
0.2%,
respectively.
The
large-cap
S
&
P
500,
meanwhile,
has
gained
roughly
9.5%.
Over
the
past
year,
the
small
and
midcap
benchmarks
are
up
15%
and
24%,
respectively,
while
the
large-stock
index
has
soared
31%.
March
has
proved
to
be
a
better
month
for
so-called
SMID-cap
stocks,
however,
with
the
S
&
P
MidCap
400
gaining
about
4%,
while
its
large-cap
counterpart
has
added
2.4%.
These
trends
suggest
that
a
bottom
may
be
forming
for
smaller
stocks,
which
now
have
an
“extremely
attractive”
relative
valuation
after
struggling
to
keep
up
with
fiery
gains
from
large-cap
names,
BMO
said.
“From
our
perspective,
both
groups
have
been
unfairly
punished
and
we
continue
to
see
this
relative
weakness
as
a
buying
opportunity
for
investors
especially
considering
the
fundamental
underpinnings
for
the
group,”
strategist
Brian
Belski
wrote
in
a
Tuesday
note.
“However,
given
our
expectation
for
price
choppiness
throughout
the
remainder
of
the
year,
we
continue
to
advocate
a
highly
selective
approach
when
it
comes
to
portfolio
positioning.”
SMID
stocks
have
rebounded
sharply
following
similar
relative
underperformance
over
the
past
20
years,
Belski
added.
To
play
this
trend,
he
listed
several
stocks
in
BMO’s
SMID-cap
universe
that
the
firm
rates
as
outperform.
Take
a
look
at
a
selection
of
those
names
below:
DoorDash
is
a
top
stock
included
in
BMO’s
outperform-rated
SMID-cap
portfolio,
which
includes
several
companies
above
the
general
SMID-cap
market
cap
levels
as
it
may
have
not
been
rebalanced
yet.
Shares
of
the
food
delivery
company
have
soared
more
than
40%
this
year
and
about
132%
over
the
past
12
months,
giving
the
company
a
market
cap
of
roughly
$56
billion.
In
a
March
15
note,
Piper
Sandler
analyst
Thomas
Champion
noted
DoorDash’s
position
as
the
most
expensive
out
of
its
peer
group,
but
also
the
largest
player
in
the
growing
on-demand
U.S.
food
delivery
market.
The
company’s
size
allows
it
to
further
expand
its
market
share
and
capitalize
on
shifting
post-Covid
consumer
habits
that
lean
more
toward
on-demand
delivery
services,
he
said.
Software
company
Dynatrace
,
which
has
a
market
cap
of
about
$13.7
billion,
was
also
included
on
BMO’s
list.
Morgan
Stanley
initiated
the
stock
with
an
equal
weight
rating
in
mid-February,
saying
long-term
“share
gains
should
continue
owing
to
strong
technology,
breadth
of
product
and
a
consolidation
opportunity
where Dynatrace should
emerge
as
a
net-beneficiary.”
The
firm’s
$60
price
target
suggests
that
shares
of
Dynatrace
—
which
BMO
Capital
analyst
Keith
Bachman
said
last
year
will
become
a
leader
in
the
AI
space
—
could
gain
30.4%
from
Tuesday’s
close.
Real
estate
investment
trust
CubeSmart
,
with
a
roughly
$10
billion
market,
also
made
the
cut.
Analysts
surveyed
by
FactSet
have
a
$46.91
target
price
on
the
stock,
suggesting
about
5.6%
potential
upside.
Other
top
stocks
included
in
BMO’s
SMID-cap
coverage
include
social
media
company
Snap
,
discount
retailer
Ross
Stores
and
electric
power
and
natural
gas
supplier
Constellation
Energy
.
