Stock forecasters are bullish on small-cap stocks, predicting bigger returns due to potential IPO surge.

Stock forecasters are optimistic about small-cap stocks, despite a 1% dip in the Russell 2000 this year. Some predict bigger returns due to factors like a potential IPO surge and historical post-bear market performance. Analysts believe valuations are appealing and see bullish themes in the economy benefiting small-cap companies.

Private companies may turn to public markets for capital as private equity loans mature and interest rates rise. An increase in IPOs could benefit small-cap stocks, historically performing well after bear markets. Analysts note the potential attractiveness of going public for companies in need of refinancing or private equity exits.

The Trump administration’s focus on an America-first economy could boost small public firms, with proposals like tax cuts and breaks benefiting domestically oriented companies. Analysts predict mid-cap and small-cap companies will benefit from a congressional focus on the domestic economy. Small-cap stocks could see a resurgence after lagging in recent years.

Read more at Yahoo Finance: 4 reasons forecasters are bullish on the market’s smallest stocks after years of underperformance