With Wall Street laser-focused on the banking crisis, there was a group of stocks that didn’t receive a lot of love this week: small-cap stocks.
However, I think there is tremendous opportunity in select small-cap stocks right now – and it’s all about investing in the right ones. So, in today’s Market 360, I’ll share an exciting phenomenon that is currently opening a window for huge gains in small caps. But before we dive in, let’s first review what a small-cap stock is.
Here’s What You Need to Know
Small-cap companies can be some of the most innovative and profitable on the market. Though they are sometimes misinterpreted as only startups or brand-new companies, they are technically just companies whose total market value, or market capitalization, ranges from about $300 million to $2 billion. Large-cap stocks, in comparison, have a market value of $10 billion or higher.
The appeal of small-cap stocks is that, because they are small and often trade at lower prices, there is greater potential for big gains in a short period of time. There is also hope that a small-cap stock could become the next Apple Inc. (AAPL) or Amazon.com, Inc. (AMZN).
But the reality is that with greater growth comes greater risk and volatility, and small-cap stocks can often lack stability. For example, the Russell 2000, the small-cap index, fell 22.3% in 2022. Compare that to the S&P 500’s 19.7% decline and the Dow’s 9.2% fall. If you pick the wrong small-cap stock, you could end up with a real dud on your hands and do serious damage to your portfolio.
Luckily for you, my proprietary stock-picking system can help you find the winners and avoid the losers. It analyses over 6,000 stocks and gives them an A-F grade. An A- or B-rating means the stock is a “Buy,” a C-rating makes the stock a “Hold,” while a D- or F-rating means the stock is a “Sell.”
For example, my system flagged Aehr Test Systems (AEHR) on August 5, 2022, which went on to rally more than 135% from August 5, 2022, to February 1, 2023! Compare that to the Russell 2000’s 2% rise over the same time period. Or consider Calix, Inc. (CALX), which my system gave the green light on February 5, 2021. By November 2, 2022, CALX surged about 125%. For perspective, the Russell 2000 fell nearly 20% over that same time period.
For today, I want to share with you 10 small-cap stocks that my system recommends staying far away from. You’ll notice that each holds a D- or F-rating, which means they are “Sells” right now. Even though they are trading at low prices, these cheap stocks are not good bargains.
|Ticker||Company Name||Total Grade|
|ADV||Advantage Solutions Inc Class A||F|
|BAK||Braskem S.A. Sponsored ADR Pfd Class A||F|
|BIG||Big Lots, Inc.||F|
|EQX||Equinox Gold Corp.||D|
|GMRE||Global Medical REIT, Inc.||D|
|KRO||Kronos Worldwide, Inc.||D|
|MERC||Mercer International Inc.||D|
|PGRE||Paramount Group, Inc.||F|
|STER||Sterling Check Corp.||D|
This doesn’t mean that you should avoid low-priced/small-cap stocks completely – far from it. In fact, right now we’re in the midst of an emerging opportunity in the small-cap market.
It’s a near-perfect setup where the return potential hidden within certain small-cap stocks becomes intensified leading to potentially even bigger gains. And this happens around times of peak market uncertainty like we are experiencing today.
I revealed exactly why in my special Two Huge Predictions 2023 presentation yesterday. (I’ll give you a hint here, it has to do with misinformation.) I also shared how my Lie Detector system works, as well as my two huge predictions that are so powerful they could change the entire course of your 2023 earnings season. I also give away the name of a company – ticker symbol and all – that’s poised to skyrocket over the next 12 months.
If you missed my Two Huge Predictions 2023 presentation, don’t worry, you can catch a replay of it by clicking here.
P.S. I recently sent out a VIP briefing all about my two biggest predictions for 2023: One that will give you a chance to make a lot of money this year… a little-known stock set to skyrocket 500% or more in the coming months.
The other, my dire prediction for America’s next shocking bankruptcy… A darling of Wall Street that’s sitting in lots of unsuspecting portfolios right now. So, if you want to do more than simply tread water in 2023, you can start by watching my special Two Huge Predictions 2023 presentation to know how to best position your portfolio.
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
Amazon.com, Inc. (AMZN), Calix, Inc. (CALX), Mercer International Inc. (MERC)