Citizens Financial Group, Inc. (CFG) Stock Forecasts

Summary

Small- and mid-cap stocks (SMID) have bursts of outperformance, but have underperformed large-caps year to date as they have over the past five years. But they may be in a better position to generate market-beating returns going forward. For one thing, SMID companies tend to focus on domestic markets, so their businesses could be less disrupted by the fallout from unrest in the Middle East, the Russian invasion of Ukraine, China issues, or other geopolitical developments. As well, the valuations of SMID stocks generally are lower than those of large-caps, with the P/E ratio on the Russell 2000 Small-Cap Index, at 14, compared to a trailing P/E above 25 for the S&P 500. Finally, there are long stretches in the record books when SMID stocks have outperformed large-caps. For example, from 2003-2021, the Russell 2000 Index climbed 450%, compared to an advance of 330% for the S&P 500 index. That said, SMID stocks can be risky. The standard deviation for monthly returns was 5.7% for SMID stocks over our 2003-2021 test period, versus 4.3% for large-caps. SMID stocks fell further in