Small-cap stocks have underperformed large-cap stocks, and recent manufacturing and services industry data increases concerns that profits could stagnate. The risk of decelerating economic activity to small-cap stocks shouldn't be ignored, but that doesn't mean there aren't sectors, industries, and stocks you can buy.
Best and worst small-cap sectors
After aggregating our ratings on over 1,600 stocks by sector, the top-ranked small-cap basket is industrial goods, led by AAR Corp. (AAR), Cavco Industries (CVCO), Beazer Homes (BZH), Aegion Corporation (AEGN), and Hovnanian Enterprises, Inc. (HOV).