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BofA Says Small Caps Cheaper Than Since the Dot-Com Bubble

  • Russell 2000 Index is back below 12 times projected earnings
  • ‘Lots of opportunity’ for small-cap value traders: Carey Hall

August’s broad equity selloff has left valuations for beaten down small-cap shares at the cheapest level compared to their larger counterparts in nearly two decades, according to Bank of America Corp.

At 12 times projected earnings, the Russell 2000 Index of small-cap stocks is cheaper than even its historical averages, BofA data show. In fact, the relative forward price-to-earnings ratio for the index versus the Russell 1000 Index of large caps fell to 0.70 times from 0.71 times, more than 30% below its historic average of 1.01 times. That remains at the lowest level since the early 2000s dot-com bubble.