Mid-Cap Equities Will Be Strong in 2007

Investors would do well to focus on the mid-cap asset class in 2007, according to Standard&Poor's Equity Research Services.
An S&P news release said that, as of April 17, the S&P MidCap 400 Index is handily outperforming the large-cap S&P 500 Index year-to-date, rising 8.9% versus only a 3.8% advance for the blue chip index.
Standard & Poor’s Equity Research believes it will be difficult for many large-cap companies to continue to post double-digit EPS advances, because of the size of gains needed. On the other hand, Standard & Poor’s believes mid-caps – defined as companies with market capitalizations ranging from $1 billion – $5 billion – are generally at an earlier point in their growth trajectories, leaving them with a potentially longer asset class profit cycle, according to the news release.
“In a slowing economic environment characterized by decelerating, single-digit EPS growth for the U.S. large-cap equity asset class, we believe investors are gravitating towards mid-caps’ ongoing profit momentum,” said Alec Young, Equity Strategist for Standard & Poor’s Equity Research, in the news release. “We expect 2007 EPS growth for the S&P MidCap 400 Index to rise 13% vs. a 7% gain for the S&P 500 Index.”