It could take just 2 catalysts for pockets of speculation to snowball into a widespread bubble, one global strategist says. He recommends 3 ways to capitalize on this frothy environment.

• The US stock market is pricey, but there’s no bubble, Touchstone Investments strategist Crit Thomas says.
• There are pockets of speculation, but 2 catalysts could create a widespread market bubble.
• Thomas breaks down those catalysts and how to position in the current bubbly environment.

The US stock market is looking pricey, but it isn’t in a bubble, according to Crit Thomas, a global market strategist at Touchstone Investments, a firm that manages $26 billion in assets.

The bubbles are instead forming in low-priced and low-volume stocks.

Shares in video-retailer Gamestop (GME) are an example of this. The shares increased 815% from $35.50 on January 15 to $325 on January 29. The surge was driven by retail investors looking to squeeze hedge funds that had shorted the stock.