US Markets Loading… H M S Premium Stock market bull monsitj/Getty Images This story is available exclusively to Insider subscribers. Become an Insider and start reading now. Bank of America says small-cap value could lead the US recovery. These stocks have historically outperformed during the previous eight recovery cycles. If August trends upwards per a BofA indicator, then the US economy will officially be in recovery.  July may go down as the month when things began to look up for the US economy, according to an August 18 note from Bank of America.The bank’s US regime indicator, which tracks factors that include earnings and economic growth expectations, inflation, and credit conditions, had trended down for the previous six months before it improved in July. If August also trends higher, it would mean that the economy has entered a recovery phase.Historically, small-cap value stocks with solid cash returns have outperformed the market during this phase, reads the note. These stocks already have a head start this time: value has been the best-performing category in small caps for the last two months.Investors may have a good chunk of time to take advantage of this window of opportunity: since 1991, recoveries have lasted between five and 14 months. But investors must be aware that anything less than four months could be a bluff.If you’re ready to make an early bet in favor of the economy, then small-cap value stocks are a strong bet. During the previous eight recovery cycles, the cash-flow-from-operating-activities-to-price factor has been the best performer.Below is a list of 26 stocks from the Russell 2000 that are buy-rated by Bank of America. These stocks are in the top quintile for value and are based on five metrics that have performed best in previous recovery cycles. They include CFO/P, EBITDA/EV, Sales/EV, Book/Price, or FCF/EV.These stocks also have solid cash returns from dividends or share buybacks within the last 12 months. 3. Kinetik Holdings Inc. Class A Yahoo Finance Ticker: KNTKSector: Energy CFO/P (LTM): 0.37 Read next Receive a selection of our best stories daily based on your reading preferences. Investing Bank of America Read next

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