Looking to dip into small-cap investing? Small caps have been one of the more exciting investing opportunities available entering 2024. A combination of affordability and potential upside has helped small caps get back into the conversation, with quality small-cap ETF OUSM’s approach particularly intriguing. Along with some red-hot tech chart action, the strategy has seen solid returns over the last three months.
See more: Quality Small-Cap ETF OUSM Hits $400 Million
The ALPS O’Shares US Small-Cap Quality Dividend ETF (OUSM) has returned 10% over the last three months. That has outperformed both its ETF Database Category and Factset Segment averages. OUSM charges a 48 basis point (bps) fee for its approach, tracking the O’Shares US Small-Cap Quality Dividend Index.
As mentioned above, it’s seen some strong momentum in its Simple Moving Averages (SMAs). Its price of $38.8 sits well above both its 50-day and 200-day SMAs, $37.50 and $36.08 respectively as of January 19th, per YCharts.
So, what are the stocks that are pushing OUSM forward? Williams-Sonoma (WSM) stands out as one such firm. WSM has returned 71.5% over one year per YCharts, with a respectable forward P/e ratio of 14.14. That return above more than doubles the return by the S&P 500 Total Return Index (SPXTR) as well.
Another firm to watch has been Lincoln Electric Holdings, Inc. (LECO). LECO has returned 39.5% over the last year per YCharts. The firm also has a decent forward P/E ratio of 23.17. While WSM focuses on consumer goods, LECO manufacturers welding, cutting, and other industrial equipment.
Finally, glass fiber manufacturer Owens-Corning Inc (OC) stands out. OC has returned 68.6T over one year, with a 10.94 forward p/e ratio. Given that both OC and LEOC operate in manufacturing and industrial spaces, both could benefit from a return to U.S. manufacturing.
Taken together, small-cap ETF OUSM has some intriguing firms in its investments. Its approach, looking for small-cap stocks that meet quality, dividend yield, dividend quality, and other factors, has helped it identify such firms. By considering those and other factors, looking for the healthiest small caps, it could be a leading candidate for a small cap ETF addition to an investors’ portfolio this year.
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