Considering his status, only a brave financial prognosticator would tell investors to ignore some advice from Warren Buffet. That, however, is what Bank of America’s Savita Subramanian currently recommends investors should do.
While the investing sage has often said that the best strategy for retail investors is to purchase and hold an index fund that keeps track of the S&P 500, Subramanian, who is the head of US equity and quantitative strategy at BofA, does not think that is the best way forward right now.
Funds tracking the bellwether index remain “overcrowded,” and the large-cap stocks’ best days are in the rear-view mirror, she says. What investors really should do to maximize returns is to lean into small-cap value stocks.
“I think what you want to do for the long haul is buy small-cap value [and] set it and forget it,” the strategist opined. “We’re at a good point right now where the small-cap value benchmark is at record cheapness versus large-caps.”
With this in mind, we dipped into the TipRanks database and pulled out two names that fit a certain profile; both are small-cap members of the Russell 2000 index and both are rated as Strong Buys by the analyst consensus. Not to mention substantial upside potential is on the table here.
RAPT Therapeutics, Inc. (RAPT)
Small cap stocks with big upside potential will naturally lead us to the biotech sector. With a market cap of just under $990 million, RAPT Therapeutics is one such name. The clinical-stage biopharma’s goal is a big one; to eradicate inflammatory and cancer diseases within our lifetime. This it intends to do by leveraging its proprietary drug discovery engine and develop small molecules that target the chemokine receptor CCR4 in both oncology and inflammatory conditions.
As with any small biotech company, it’s the pipeline that matters, and so far two of the company’s drug candidates have advanced to clinical development.
On the inflammation side, the lead candidate is RPT193; In the Phase 1b study in patients with atopic dermatitis, RPT193 displayed a clinically meaningful improvement in a…
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