Small caps stocks may be rebounding from their rough down spell at the end of 2018, but there's plenty of time to hop back into the often overlooked class of stocks.

"If you're fishing for bargains just on price alone, small caps look pretty good," said Larry Wasserman, Head of Due Diligence and Investor Opinion and PNC Investments. 

The Russell 2000 was 27% off of its all-time high on Christmas Eve, and is now 18% off of that high, still close to bear market territory. But it's the average valuation on the index that matters most. The average trailing one-year price-to-earnings multiple on the Russell 2000 is just above 14, far below the historical average PE ratio of 18. 

The argument for small caps became clearer at the end of December, but as investors continue to look for good bargains in a broader U.S. market that has seen considerable valuation compression, small caps still offer value on a relative basis. 

Also, defensive sectors are good places in the stock market for investors to park their money if the economy turns down considerably, and small cap companies don't behave any differently than the large companies in that regard. Wasserman recommends consumer staples and utilities in a scenario where an investors wants to be defensive. 

See the rest of TheStreet's coverage on investment strategy for 2019, as the economy slows. 

Follow Jacob Sonenshine on TheStreet  or on Twitter @SonenshineJ

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