I love small-cap stocks. And that’s because I love scoring huge returns in the market. Forget 10% returns per year. I want a stock that can rise 10X over the course of a few years.

And where do you find those opportunities? In small-cap stocks!

That’s not an opinion. It’s a mathematical truth — see: Law of Large Numbers. The bigger something gets, the harder it is for that thing to grow. In stock terms, it’s much easier for a stock to go from a $200 million to a $2 billion market cap than it is for a $200 billion company to turn into a $2 trillion giant.

It also happens far more frequently. After all, there are hundreds of companies with $2 billion-plus market caps. But there are only two stocks with $2 trillion-plus market caps.

Get the point? Small-cap stocks soar 10X with surprising frequency, and large-cap stocks rarely do. So if you’re looking for 10X returns in the stock market, focus on those small-caps.

Indeed, that’s why I have a whole investment research service dedicated exclusively to unearthing small-cap stocks with 10X upside potential. It’s called The Daily 10X Stock Report, and we’ve already found multiple 10X winners like NIO (NYSE:NIO) and Plug Power (NASDAQ:PLUG).

In any event, I love small-cap stocks. And that’s relevant today because my research suggests that they are due for a big breakout in 2022 — and that this breakout could last for several years, meaning there may never be a better time to look for small-cap stocks with 10X upside potential than there is right now.

Small-Cap Stocks Repeating History

Here’s the data.

The valuation divergence between large- and small-cap stocks has hit levels not seen since 2001. Specifically, the forward price-to-earnings multiple on the S&P 500 large-cap index presently sits around 20X, while the S&P 600 small-cap index is trading at less than 14X. That means large-cap stocks are trading at a 43% valuation premium to small-cap stocks — the biggest valuation premium since early 2001.

So what happened back in 2001?

Well, the large-cap valuation premium evaporated, and small-cap stocks went on to crush large-cap stocks not just over the next 12 months but over the next five years, too. From 2001 to 2006, the Russell 2000 small-cap index rose more than 60%, while the S&P 500 returned a measly 7%.

Could history repeat itself in 2022?

Absolutely. Indeed, we think it is highly likely this does repeat. Over the next few years, small-cap stocks could be the biggest winners on Wall Street.

The investment implication — this is a really, really good time to start looking for small-caps with 10X return potential.

And the best way to do that? The Daily 10X Stock Report.

We’ve already identified over 100 triple-digit winners in that service and a half-dozen 10X winners. And for the reasons outlined above, we think the party is just getting started.

Click here to learn more.

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.