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Slow Day, Strong Start to 2020 for Stocks

Slow Day, Strong Start to 2020 for Stocks

While Wall Street's optimism cooled off a bit Friday, the 2020 stock market will enter the long Martin Luther King Jr. Day holiday weekend with a substantial gain. The Dow had to deal with a couple of negative notes today. The preliminary January reading of the University of Michigan consumer sentiment index came in slightly lower than December and below analysts' expectations. Meanwhile, Boeing's (BA, -2.4%) 737 Max-related woes continued, with Canaccord Genuity analysts saying the company will announce a "substantial charge" related to its troubled aircraft. Still, housing starts hit a 13-year high in December, and gains in Chinese industrial production also buoyed investors' spirits. The result was an 0.2% uptick in the Dow, which enters the weekend at 29,348, up 2.8% year-to-date.

Small-cap stocks, meanwhile, look the same as they did throughout 2019: productive, but lagging their larger peers. The small-cap Russell 2000 Index is up 2.2% this year. However, numerous individual smaller companies remain packed with potential, if you know where to look. For instance, the health-care sector is loaded with small- and mid-cap picks that appear primed for a run in 2020. And despite the "growthy" nature of smaller companies, you can find several names that stand out for their generous and consistent dividend payouts. Small-cap stocks should be handled with caution, of course, given their often narrow revenue streams and lack of access to capital. That's why it makes sense to leave the shopping to Wall Street's pros. Here, we look at 13 small caps where optimistic analysts have congregated en masse, and lay out the bull case for each.

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