Which small-cap stocks are still attractive amidst market turmoil? Morgan Stanley provides a reference list.

In the market turmoil caused by the massive imposition of tariffs by President Trump in the United States, small cap stocks in the US have been declining for three consecutive trading days. As of the close on Monday, the Russell 2000 index, which is mainly comprised of small cap stocks, has dropped by about 26% from its high point in December of last year. Morgan Stanley believes that the performance of small cap stocks is expected to lag behind large cap stocks, partly because the former have higher exposure to macro uncertainties, and analysts have been continuously lowering their earnings per share forecasts for small cap stocks. However, Morgan Stanley also added that there are still some small cap stocks worth considering. In a report, Morgan Stanley's US equity strategist Michael Wilson stated: "Even so, there are still many opportunities for small cap stocks beneath the surface." The firm said that small cap stocks with good return on equity (ROE) and growth momentum have performed well historically, and are expected to do so in the first quarter of 2024 to 2025. The firm's analysts have selected small cap stocks with positive ROE and momentum in the past 12 months, and have rated them as "hold" or "hold/watch" stocks. Here are some stocks with a market capitalization of at least $50 billion: