ABN places bets on small-caps for 2005

The sector is unlikely to outperform the large-cap sector, but “should match” its “modest gains” set to follow earnings growth through this year, ABN says. ”We believe the evidence of current sector weightings, a bottom-up December 2005 price/earnings ratio of 12.5x and earnings growth of 13% all justify current valuations.” According to the Hoare Govett Smaller Companies (HGSC) index used by ABN in its analysis, the sector returned 40.4% and 20.3% respectively in 2003 and 2004, although it is unlikely to repeat these figures. Last year some 19 companies in the HGSC + AIM stocks index...