Small capitalization stocks haven’t been this cheap in 20 years. That’s based on a comparison between the S&P Small Cap 600 and the S&P 500.

Have a look at some fascinating 20-year charts for the two indices examining the price-to-earnings correlation and the difference in performance.

Then consider 10 small caps that analysts have pegged to return between 27% and 99% over the next 12 months.

Excerpts from an article by Philip van Doorn, MarketWatch

Small-cap stocks, as a group, are bargain-priced relative to more popular large-caps, but you may be surprised at just how cheap they are. And wait until you see their performance from similar valuation levels.

Look at this 20-year chart, which shows the weighted forward price-to-earnings ratio for the S&P Small Cap 600 Index SML versus the large-cap benchmark S&P 500 Index SPX:

The small-cap group typically trades much closer to the valuation of the large-caps than it does today.

Now take a look at a 20-year comparison of total returns for the two indexes:

Among the S&P Small Cap 600, there are 24 stocks with 100% “buy” or equivalent ratings that are each covered by at least five analysts polled by FactSet.

Here are the top 10, sorted by the 12-month upside potential implied by the consensus price targets:

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