Japanese small-cap stocks represent a strong area of opportunity in 2014, Brooks Macdonald Asset Management's top investment strategist said Wednesday.
"Small-cap Japan is the under-the-radar catch-up play because Japan has the only small-cap sector that lags large caps," Gemma Godfrey said. "And some of these companies are only being covered by a couple of analysts, so the potential for mispricing is significant."
On CNBC's "Halftime Report," Godfrey said some of the sector's benefits have been long in the making.
(Read more: Top 3 cheap stocks for 2014: Pro)
"There are also clear catalysts in terms of consolidation. We've seen $100 billion of M&A in the last year alone, as well restructuring and reform," she said. "If we look, we've seen two decades of cost-cutting, and companies are finally starting to benefit from this."
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