Although small-cap stocks tend to be more volatile than large-cap or mid-cap stocks, investors find them appealing due to their solid growth potential. Given the continued low interest rate environment that is favorable for small-cap stocks we believe it would be smart to place your bets on fundamentally sound small cap stocks CTS Corporation, Universal Electronics, and Travelzoo, all of which have experienced price declines in the past several months. Let’s discuss.Last week was the best week in months for the major stock indexes, thanks to a stronger-than-expected start to the third-quarter earnings season. The stock market will remain volatile due to concerns about rising Treasury yields and inflation as well as disappointing Chinese economic data. Although small-cap stocks tend to experience greater volatility when the market becomes volatile than larger-cap and mid-cap stocks, this current low-interest rate environment is good for small-cap securities.

The growth potential of small-cap stocks is usually higher. Over the long run, small-cap value index funds outperform the S&P 500. Investors’ interest in small-cap stocks is evidenced by the Dow Jones U.S. small-cap total stock market index’s 39% returns over the past year.

We believe that it is a smart move to acquire shares in the smaller-cap stocks CTS Corporation(CTS), Universal Electronics Inc./UEIC, and Travelzoo [TZOO], which, despite their market volatility are still fundamentally sound.

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