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Elite Small Caps on Sale

Two dozen wide- and narrow-moat small companies are undervalued, according to our metrics.

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As my colleague Alec Lucas discussed recently, small-cap stocks have been also-rans to their large-cap brethren lately. The Morningstar US Large Cap Index has trounced the Morningstar US Small Cap Index during the past year, with the former up more than 6% while the latter is 5% in the red.

Given this wide gap in performance, Lucas suggests that buying small caps now may reward long-term investors--and these smaller fries may be especially attractive to those who believe that the small-cap premium will win out again over time.

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Susan Dziubinski does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.