The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
By Ian Wyatt
NEW YORK ( TheStreet) - The relentless push higher by stocks has many an analyst scratching his or her head right now.
They can scratch away, because the bottom line is this: Companies continue to beat earnings expectations. Since there's no way around that simple fact, the market continues to move higher.Check this out. Through last Friday, data compiled by Capital IQ shows that 453 companies in the S&P 500 have reported, and 71 percent beat earnings expectations. The average upside surprise has been 6.1 percent. With the S&P 500 trading at 16-times estimated 2010 earnings you might think large-cap stocks are getting expensive. They're really not. In a few weeks this fiscal year will be in the books. Based on the number of companies beating earnings estimates, forward earnings estimates should increase. Right now, you can buy the S&P 500 for 14-times estimated 2011 earnings. That's not too bad when you consider that analysts expect long-term average EPS growth for the S&P 500 to exceed 10 percent. Remember, buying growth at a low PE is typically better, and right now many large cap stocks look attractive. This signals to me that we should still be buying small-cap stocks because as I've said a thousand times, small cap stocks always perform over the long term . One of the best ways to find exciting small cap stocks is to monitor new additions to the small cap indices. I prefer the S&P 600 Small Cap Index, and the Russell 2000 Small Cap Index. On Feb. 28, I found two companies that were added to the S&P 600: Navigant Consulting (NCI - Get Report): This is a $485 million market cap company that provides specialized consulting services for things like change management, risk, and uncertainty. Its customers include hospital operator MedCath (MDTH), privately held Ontario Power Authority, and the British Sky Broadcasting Group.