Analysts cautioned that the recent momentum-based trading that has helped propel the small-cap and technology plays could quickly sour, potentially leaving investors vulnerable to a quick sell-off.
The small-cap play may be overbought, with the benchmark Russell 2000 now trading at a forward price-to-earnings of 22.4 as of Thursday, compared to the S&P 500’s 16.6.
“You’re overpaying for a company that’s considered safe,” Jeff Holzmann, managing director at Iintoo, told the WSJ.
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