Small-cap stocks are in a bear market rout.
Now is the time to buy.
Which small-cap stocks? Read on…
After a correction in 2015, losses accelerated this year; some stocks lost 50% or more of their value.
It’s a complete and utter train wreck worthy of tears, but only for the weak-minded and backward-looking investor.
The wise and successful investor surveys the wreckage and sees opportunity.
If you have a modicum of patience, you’ll likely be rewarded when buying small-cap, low-priced stocks in the current environment.
Which stocks should you buy?
The number of buy recommendations today is quite large. A smart strategy is to collect a basket of small-cap stocks, since you never know where the big winners are hiding. Diversification does, indeed, deliver results.
With many stocks down so much, many will double in value over the next year or two. We’re not talking about infinite buy and hold, however. A double in 12-24 months is a fantastic result, and one you can duplicate many times.
Steel yourself during the storm and start buying.
Speaking of steel, some of the biggest bargains are in the steel space…
The stunning collapse in commodities is finally showing some signs of recovery. Eventually, steel will come roaring back. When it does, a low-priced stock like U.S. Steel (X) will explode higher.
The company recently reported earnings in the middle of the storm and the news was actually pretty decent, all things considered. Yet, U.S. Steel shares moved lower again.
The stock now trades for just over $7 per share. U.S. Steel is heading toward bankruptcy, apparently.
Give me a break. I’d buy U.S. Steel all day long at these levels!
Then, a year from now when the stock returns to double digits, I’d collect a huge return on investment. That’s the point, after all.
The risk of further decline here is quite low, thus the risk/reward is in the favor of the investor today.
That dynamic exists across a wide swath of the small-cap space.
You’ll enjoy the feast when things get better—and they will get better.
This post originally appeared in mainstreetinvestor.com.
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