Although concerns about the resurgence of Delta-variant-driven COVID-19 cases and inflationary pressure that have led to volatility in the stock market, the decline in unemployment levels and the Fed’s dovish stance have raised investors’ hopes. Amid this scenario, we think it could be safer to bet on undervalued small-cap stocks AdvanSix (NYSE:ASIX), Vera Bradley (NASDAQ:VRA), and ARC Document (ARC). Let’s discuss.Lingering concerns about the spike in COVID-19 cases globally due to the fast-spreading Delta variant and its impact on the economic recovery, coupled with the fading fiscal stimulus, have made investors anxious about the tenor of the economic recovery. In addition, with wages rising even with weak hiring, worries about inflation have resulted in a bumpy September for the stock market.
However, despite these concerns, Federal Reserve Chairman Jerome Powell indicated that current, heightened, inflation is transitory and should eventually fall to target levels. Furthermore, notable job gains last month and a slight decline in the unemployment rate should buoy the stock market in the coming months. This bullish outlook and the continuing low-interest-rate environment bode well for small-cap stocks.
Therefore, we think fundamentally sound small-cap stocks AdvanSix Inc . (ASIX), Vera Bradley, Inc. (VRA), ARC Document Solutions, Inc. (ARC), which look undervalued at their current price levels, could be solid bets now.