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More Tailwinds to Come For Small Caps: Stock Picker

Small and mid-cap stocks have outperformed the large caps this year and there will be "more tailwinds" for the smaller caps going forward in 2010, said David Sowerby, chief market analyst and portfolio manager at Loomis Sayles. He shared his best plays with investors.

“Off the market lows of last March, you traditionally get a two-year run or better where small caps outperform large caps,” Sowerby told CNBC.

“We’re a year into that.”

In the near future, Sowerby said the two factors that are going to give small caps the better edge are real GDP and free cash flow yield, as they are equal or better than large-cap stocks.

Sowerby Likes:

Standard Parking

Rollins

Oracle

EMC

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  • Watch Sowerby's Previous Appearance on CNBC (Feb. 9, 2010)

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Disclosures:

No immediate information was available for Sowerby or his firm.

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