The Russell 2000 is ending the year on a strong note. As of Dec. 18, the small cap index is up about 11% for the year. That can make investors hesitant to chase these stocks higher, but small caps may still offer attractive opportunities heading into the new year.
For starters, many analysts believe that 2026 will be a strong year for small-cap stocks. Much of this is due to investors looking for opportunities outside of the overvalued tech trade, particularly the Magnificent 7 stocks that have carried the market to new heights. Small-cap stocks are expected to be a beneficiary of this rotation.
