Loading...

Follow Small Cap Firm on Feedspot

Continue with Google
Continue with Facebook
or

Valid

There’s an old investment adage to buy when things take a turn for the worst.

While that sounds great in theory, human psychology makes it difficult. Even thinking about investing in a stock that’s been declining—or has been making bad news headlines—tends to put most of us into flight mode and avoid it all together.

But a pause to think more rationally is where the opportunity arises to beat the market.

Recognizing that a company is out of favor for short-term reasons, we can then look a bit further down the line. If that company can solve the problem before it goes bankrupt, then it may be a good investment. At least, that’s how investors like Sir John Templeton, Baron Rothschild, and Warren Buffett made so much of their money.

Sir John Templeton wasn’t your typical Wall Street money manager.

In 1939, Europe was just about decimated. So, Templeton bought every European stock trading below $1.00 a share and made a fortune. In fact, he bought shares in 104 companies for about $10,400. He would make a fortune.

He taught us to buy excessive pessimism.

Warren Buffett’s Top Rules to Investing in Fear

To this day, Warren Buffett advises that a “climate of fear is your friend when investing; a euphoric world is your enemy.” And of course, we all remember his advice to “be fearful when others are greedy and greedy when others are fearful.”

One of the greatest examples was his stake in shares of The Washington Post.  Shares may have plummeted in the bear market of 1973-74, but the billionaire still saw value, buying and watching his take explode more than 100 times over.

Blood in the Streets Investing

Baron Rothschild once told investors, “The time to buy is when there’s blood in the streets, even if the blood is your own.” He knew that very well, considering he made a small fortune buying the panic that followed the Battle of Waterloo against Napoleon.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Some of the best performing small cap stocks of the day included:

 Cohu Inc. (COHU)

At the moment, shares of COHU are up 24%, or $3.74 on three times average volume after an upgrade from a hold to buy rating at Stifel Nicolaus. The firm has a price target of $22. Following the company’s latest earnings results, analysts are confident that fundamentals have finally bottomed out, with a recovery forming.

Akorn Inc. (AKRX)

Shares of AKRX are up 17%, or 52 cents a share on volume of 10.25 million shares, as compared to its daily average of 2.5 million shares. All after reporting a loss of $82.2 million for the most recent quarter, or 65 cents a share.  Adjusted EPS came to 10 cents, which beat expectations for an adjusted EPS loss of 14 cents.  Revenue was $165.9 million, which was better than expectations for $153 million.

Cray Inc. (CRAY)

Shares of CRAY were up 14%, or $3.74 on the day on volume of 994,489, as compared to daily average volume of 340,275.  All after it and AMD signed a deal with it to develop the fastest supercomputer in the world.

According to MarketWatch:

“Su and Peter Ungaro, the chief executive of Cray, said the system — planned to be the size of about two basketball courts — will reach a processing speed of 1 exaflop per second, which translates to an unimaginable 1 quintillion floating-point calculations per second. It will be about 50 times faster than today’s fastest supercomputers. AMD will provide both the main processors, or CPUs, and the graphics processors, or GPUs.”

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Investors were in panic mode this week.

President Donald Trump just said he would hike tariffs to 25% by Friday on $200 billion worth of goods if the two sides didn’t reach a deal in a timely manner.  Of course, news of that caliber will always lead to chaos and fear.

However, even in times of chaos, it never pays to panic.  Instead,  here are some of the top ways to protect yourself and your portfolios.

Tip No. 1 – Have Discipline

When markets fall apart, we tend to get a bit emotional. Logic goes right out the window. Discipline means holding on to good stocks, even if they move lower. It also means avoiding the desire to make speculative, risky bets hoping to break even.

We have to remember that markets are resilient. They don’t stay down for long.

Also, be willing to see out the “blood in the streets” trades.

When markets crash, investors are typically presented with outstanding buy opportunities in oversold stocks that no one else wants to touch.

In short, remain calm and focused. Don’t sell out of panic. Just sit tight.

Tip No. 2 – Consider Buying Precious Metals

When markets turn south, investors typically flock to precious metals like gold and silver. Therefore, it’s always wise to keep a small percentage of your portfolio in precious metals as a hedge for a potential market meltdown.

Given the fact that precious metals act as a great form of insurance against global chaos and stock market meltdowns, it’s one of the safer tools. Gold, for example, will increase in price in response to any number of potential events; major uncertainty; a decrease in the value of the dollar.

Tip No. 3 – Be Well Diversified for Volatility

Some investors,  betting on higher volatility will turn to:

  • iPath S&P 500 VIX Short-Term Futures (VXX)
  • ProShares Ultra VIX Short-Term Futures (UVXY)
  • VelocityShares Daily 2x VIX Short-Term ETN (TVIX)
Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

It’s one of the hottest biotech stocks of 2019.

Since the year began, shares of Axsome Therapeutics Inc. (NASDAQ:AXSM), a clinical stage biopharmaceutical company that is developing novel therapies for central nervous system (CNS) disorders, has exploded from less than $3 to $17.68.

It’s pushing higher in response to positive clinical data regarding one of its depression drugs, AXS-05, which significantly improved depression symptoms after six months, when compared with bupropion.

The drug was also deemed to be safe and well-tolerated with no serious side effects.

“The clinically meaningful improvements in depressive symptoms seen with AXS-05 in this study were achieved versus an active comparator that is a well-established antidepressant, as early as only one week after initiation of treatment,” said Professor Maurizio Fava, MD, Executive Vice Chair, Department of Psychiatry, Massachusetts General Hospital (MGH) and Associate Dean for Clinical & Translational Research, Harvard Medical School.

“Data show currently marketed antidepressants fail to provide adequate treatment response in about two thirds of treated patients. An estimated 16 million Americans suffer from major depressive disorder each year. As an oral NMDA receptor antagonist with multimodal activity, AXS-05 could provide a new approach to treating this potentially life-threatening condition.”

Further good news for the biotech could send it screaming higher in our opinion.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

American’s infrastructure has been failing for quite some time.

One look at the countless potholes, congested roads, derailed trains, collapsed bridges and dams is proof enough. Just to fix it all could cost as much as $3.6 trillion by 2020, says the American Society of Civil Engineers (ASCE).

What’s worse, the ASCE just gave current U.S infrastructure a D+ rating. Even the Federal Transit Administration (FTA) has estimated that there’s an $808.2 billion backlog in deferred maintenance on the nation’s rail and bus lines.

Yet, federal spending on infrastructure has fallen 9% in the last 10 years.

The American Road and Transportation Builders Association says 56,000 bridges in the U.S. are “structurally deficient.” The U.S. Department of Transportation, more than two-thirds of our roads are “in dire need of repair or upgrades.”

However, we may soon see the beginnings of a potential fix.

Democratic Congressional leaders and the President are now aiming for a $2 trillion package. While the two sided didn’t discuss how it would be paid for, it’s a step in the right direction.

Consider just how bad our current issues are:

More than 15.500 of the country’s 87,539 dams are still considered high hazard potential for public safety and could take nearly $60 billion to repair

More than 180,000 people were evacuated from California in February 2017 on fears that the Oroville Dam would collapse

More than 3,032 pipeline spills since 2006 has cost the U.S. $4.7 billion

More than 25% of current bridges are more than 50 years old, as well.

Worse, we need to fix just about everything, even the water supply.

Consider this, for example.

The U.S. needs $1.27 trillion over the next two decades to meet the growing demands for wastewater and safe drinking water. At the moment, the U.S. alone consumes 42 billion gallons of treated drinking water every day. Yet, six billion gallons are lost because of leaking pipes.

On top of that, a lack of progress in infrastructure repairs could cost U.S. GDP $3.9 trillion by 2025. Businesses could lose $7 trillion by 2025. More than 2.5 million jobs could be lost. All thanks to poor roads and airports, an aging electrical grid, and higher costs for businesses, which are passed to families and workers.

Tack on lost productivity, poor public health issues, and experts say to fix it all could cost us trillions more by 2020, according to the American Society of Civil Engineers (ASCE).

Some issues are so severe, it’ll cost billions just to bring it all to safe standards.

Some of the top stocks to watch include U.S. Steel (X), U.S. Concrete (USCR), Vulcan Materials (VMC), H&E Equipment Services (HEES), and Jacobs Engineering (JEC).

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

One of the best ways to spot reversals is by spotting excessive fear.

To do so, we typically watch for agreement among Bollinger Bands (2,20), Relative Strength (RSI) and Williams’ %R in either overbought or oversold territory.

Let’s look at the Russell 2000 (RUT), for example.

Since the start of 2018, notice what happens to the index when the lower Bollinger Bad (green lime) is hit or penetrated at the lows. Not long after we typically see a pivot from that lower Band. We can then confirm that things have gotten way out of hand by using RSI.

Now, notice what happens when the lower Bollinger Band is hit, and RSI has pulled back to or below its 30-line. Not long after, the stock pivots higher. However, we can confirm our findings yet again by looking at Williams’ %R. Now, notice what happens when the lower Band is hit, RSI is at its 30-line, and Williams’ is at or below its 80-line. Yep, the index bounces again.

Up to 80% of the time when RSI, W%R, and the Bollinger Bands agree, we see a pivot.

Now, look at what happens when the upper Bollinger Band is hit or penetrated, as RSI moves to or above its 70-line, and as W%R moves to or above its 20-line.

Again, up to 80% of the time, we see a pivot.

While some traders don’t believe technical analysis is useful, it truly is because it can accurately measure the excessive bouts of fear and greed among the herd.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Always be on the lookout for prominent investing themes.

That’s how the long-term wealth can be found.

“Thematic investing is about capitalizing on future trends. Its forward-looking nature stands in clear contrast to the more widely used market capitalization approach [which] assumes that past winners will continue to win out… Why is thematic investing a good idea?

In a rapidly changing business environment, the winners will be those that anticipate trends and take advantage of new opportunities,” once noted Towers Watson, “Thematic Investing”

Themes become so powerful because of the ripple effects they create, especially the world-changing ones that can change the lives of billions of people.  The green revolution is the perfect example.

Even the marijuana story is a game-changing theme. The fact that 80 million Baby Boomers are fueling growth in biotech.

The artificial intelligence movement that may just change how we see the world.  And even the domestic oil boom that’s outpacing Saudi Arabia and Russia.  Even uranium is quickly re-emerging as a comeback story.

Simply uncover big themes and spot stocks that could get caught up in the wave.

In fact, if you can spot a hot theme early enough, you could make some great money.

Look at the electric vehicle (EV) theme for example.

The electric vehicle (EV) market has been nothing short of explosive.

There’s a reason it leads our list of “must own” sectors.

And we’re not the only ones excited about the potential. Millions are.

Total SA’s chief energy economist believes electric cars could make up 15% to 30% of global new vehicle sales by 2030, as noted by Bloomberg.

OPEC quintupled its forecast for sales of EVs to 266 million from 46 million.  The International Energy Agency doubled its 2030 forecast from 23 million to 58 million. Exxon Mobil boosted its 2040 estimate from 65 million to 100 million.

Statoil ADA even believes EVs could account for 30% of new car sales by 2030.

BHP Billiton believes there will be 140 million of them on the road by 2035.

“Demand for electric vehicles is forecast to increase significantly over the next ten years as technology improves, the price gap with petrol cars is closed and more electric chargers are deployed,” IDTechEx Senior Technology Analyst Franco Gonzalez said, as quoted by Reuters.

Just over the last couple of years, the market has been growing at a nearly 50% CAGR, and is now on the cusp of something far greater, especially as car battery prices drop 20% a year, allowing electric cars to compete with gasoline models.

That has big opportunity written all over it.

Ford Motor Company just said it would introduce 13 new electric or hybrid vehicles.  Volkswagen wants to build an electric version of each of its 300 auto models by 2030.  Even Volvo and the Jaguar Land rover have said that their entire fleets of vehicles will be electric or hybrid-electric by 2019 and 2020, respectively.

To profit from a theme such as this, you can begin by identifying stocks that are part of the overall story, such as those involved with lithium, cobalt, manganese, copper, and even stocks that are involved with EV charging stations.

This is just one of many, many theme-based investing examples that exist.

Spot one like this early enough, and you could uncover goldmine opportunities.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Small cap stocks, or stocks whose market cap fall between $300 million and $2 billion, should always be part of a well-balanced portfolio for three key reasons.

One reason is the historical performance of small-cap stocks.

All thanks to strong financial performance and tax reform, which reduced the corporate tax rate on small cap stocks to 21% from 35%.

In addition, driving further interest into small cap stocks is the fact most are insulated from geopolitical issues, such as trade war fears.  Remember, small caps have much less exposure to international headaches than companies in the S&P 500.

Even better, small-cap stocks have a history of outperforming large-caps, returning an average gain of 12% a year over the last 90 years, as compared to a 10% annualized gain on the S&P 500, as reported by Market Watch.

And, according to Smart Asset:

“Between 1979 and 2015, small-cap stocks in the Russell 2000 index outperformed large-cap stocks in the S&P 500 20 times within 37 years. In terms of the average annual return on investment, small- and large-cap companies’ stocks were virtually neck and neck, with the S&P 500 paying investors back 11.7% annually versus the 10.3% annual returns generated by the Russell 2000 index. In the long run, investing in smaller cap stocks may be just as profitable (if not more profitable) than investing in larger ones.”

Two, small cap stocks can offer better ground floor opportunities.

Institutions, for example, don’t often pay much attention and can’t invest in smaller companies without driving up the price.  This offers the average investor a good amount of opportunity, especially if we find one with a bright future, solid revenue and earnings growth.  For example, years ago, we spotted ACADIA Pharmaceuticals (ACAD) at less than $2 a share.  It was ignored for quite some time.  But as the benefits of its Parkinson’s disease Psychosis (PDP) came to light with FDA approval, the one-time unknown small cap ran above $50 a share.

Three, small caps help you diversify your portfolio.

We all know the saying ‘don’t put all your eggs in one basket’, but it’s essential to apply this rule when investing. Spreading your money across multiple assets means you won’t be depending too heavily on one kind of investment. If one of them performs badly, hopefully, some of your other investments might make up for these losses.

A diversified portfolio can include large and small companies, different industries or sectors, U.S. and overseas securities, bonds as well as cash.

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

eSports is quickly becoming one of the “can’t miss” trades of the year.

This year alone, the market is expected to grow 15% year over year to 453.8 million, according to analysts at Newzoo.  Better, total revenue for the global market could reach $1.1 billion in 2019.  By 2022, it could fly as high as $3.2 billion.

“eSports’ impressive audience and viewership growth is a direct result of an engaging viewership experience untethered to traditional media,” says Newzoo CEO Peter Warman.

“Plenty of leagues and tournaments now have huge audiences, so companies are positioning themselves to directly monetize these eSports enthusiasts. While this began happening last year, the market is constantly expanding on its early learnings. The result: 2019 will be the first billion-dollar year for eSports, a market that will continue to attract brands across all industries.”

But this is just the start.

Goldman Sachs estimates the total online population is over 3.65 billion people globally, to go along with 2.2 billion gamers, but eSports viewers represent just 5% of the online population, which suggests that there should be plenty more room for growth.

So, it makes sense to look at stocks that could benefit, including:

Turtle Beach Corporation (HEAR)
Market Cap: $165 million

Turtle Beach Corporation operates as an audio technology company, providing gaming headset solutions for various platforms, including video game and entertainment consoles, handheld consoles, personal computers, and mobile and tablet devices under the Turtle Beach brand.

With gaming contests increasing, it’s just beginning to spark interest in top-end headsets.

The company approved a repurchase program of up to $15 million over the next two years. “We are confident in the strength and future of Turtle Beach,” said Juergen Stark, CEO of Turtle Beach. “This repurchase program, our acquisition of ROCCAT, and the continued expansion of our gaming audio products demonstrate our balanced strategic approach and our commitment to investing in profitable growth. We look forward to delivering value to our shareholders through continued execution of our strategic growth pillars and effective use of our capital.”

“We expect to generate free cash flow of over $23 million in 2019, or over $1.40per share. While our top priority is funding our core business and future growth drivers, such as our recent acquisition of ROCCAT, we believe our stock represents one of the most attractive investment opportunities in the gaming space, and we will take advantage of the opportunity to invest in our company as appropriate.”

Read Full Article
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

The odds are stacked against you as an investor.

You have a job. You have a life. You just don’t have time to investigate opportunities like a professional analyst who covers 10 stocks, visits the companies, talks to management regularly, and pores over word of quarterly earnings conference call.

Professional investors have so many advantages over you that they should be able to make fortunes in stocks.

If you look at the average mutual fund returns, however, you know they can’t win even with all the advantages.  So, if they can’t even beat the markets, how can you succeed as investor?

Well you can. It starts with the basics. Over the years I’ve refined five guiding principles that will make you a better investor and survive even the toughest markets.

Here they are. 

  1. Discover What Type of Investor You Are

The market makes fools of some of the brightest minds out there. And it’s important to realize early on that you won’t have all the answers because you won’t right away.

It takes time to discover your own investment weaknesses and strengths.

In order to really determine them, you must focus on why you’re investing and find investments that match that. If your goals are long-term, your investments should match.  After that, you’ve got to develop a strategy for finding and making investments that works for you.

  1. Keep an Open Mind

Being open to investment strategies is generally a good thing, even if you think you’ve got something that works well already.  If you chase and deploy all of them you’ll end up complicating the whole process and your performance will suffer.

The key is to focus and become intimately familiar with the approaches that align with your investment style as we discussed above. Ultimately you must develop entry and exit systems to take as much emotion out of the equation as possible.

Know your risk tolerance and make sure you have protective points in place to preserve capital.

  1. Assume You Won’t Be Perfect

It’s how you deal with loss that often determines how successful you are as an investor.

Strive for continual improvement but don’t get hung up on a perfect track record.

Keeping losses small and squeezing as much out of the winners as you possibly can. That way even if you’re “right” on less than half of your investments, you will still make money over time.

  1. Know Where the Best Profit Opportunities Are

I tend to search for investment ideas in small-cap stocks.

That’s because most are insulated from geopolitical issues, such as trade war fears. Remember, small caps have much less exposure to international headaches than companies in the S&P 500.

Even better, small-cap stocks have a history of outperforming large-caps, returning an average gain of 12% a year over the last 90 years, as compared to a 10% annualized gain on the S&P 500, as reported by Market Watch.

And, according to Smart Asset:

“Between 1979 and 2015, small-cap stocks in the Russell 2000 index outperformed large-cap stocks in the S&P 500 20 times within 37 years. In terms of the average annual return on investment, small- and large-cap companies’ stocks were virtually neck and neck, with the S&P 500 paying investors back 11.7% annually versus the 10.3% annual returns generated by the Russell 2000 index. In the long run, investing in smaller cap stocks may be just as profitable (if not more profitable) than investing in larger ones.”

  1. Have a Plan

Have a complete 360-degree view of what you’re buying before you buy it. Fundamentally, take a look at what’s under the hood of the company with regards to earnings ratios. Technically, understand what’s happening in the short- and long-term with support and resistance.

Know your exit strategy, and your money management strategy, including stop losses and trailing stop losses.  Never risk money you cannot afford to lose.  Keep your expectations in check, be realistic.  And above all else, never risk more than you can afford to lose.

Read Full Article

Read for later

Articles marked as Favorite are saved for later viewing.
close
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Separate tags by commas
To access this feature, please upgrade your account.
Start your free month
Free Preview