Small Companies Come Alive
Igor Manukhov - May 31, 2024
After a few years of relative struggle, small Canadian companies are starting to outperform. Let's see if that will stick.
Stocks of small companies have been struggling in the last few years. They missed out on the market recovery of 2020 and, in general, have been lagging their larger, more established counterparts.
While small companies in the US (represented by the Russell 2000 index) continue to struggle, Canadian small companies might be turning around. The chart below depicts a relative strength line (red line) along with a 30-week moving average of that relative strength line (blue line) of Canadian small companies vs Canadian large companies. As you can see, small companies are starting to win. I would be patient before declaring a win, as temporary strength did happen before in 2022, but quickly faded away.
I would definitely put the small company index on my radar.
