A Small-Cap Stock for Every Emotion

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Seuccess Happy Business ManWith investors wondering if the volatility is behind us and wanting to take action with their holdings, I’ve come up with eight stocks that will help you take action with your portfolio. I have stocks to buy if you’re feeling bullish, stocks to sell if you’re bearish, safety stocks if you’re not sure what you’re feeling and some in between.

And each of these recommendations is a small-cap stock. Why go small-cap in this market? Well, the end of summer and autumn are great times to buy small-cap stocks. With Wall Street coming back from vacation and pension funds loading up on stocks for year end, small caps are the biggest beneficiaries of increased market volume. And this year will be no different.

Each of these stock recommendations are sound and will serve you well in the months ahead.

For Those Feeling Bullish

No matter what happens in the market, there will be those investors that relish a good buying opportunity — you can count me among them. I do want to say that 500-plus-point declines for the market don’t make anyone “happy,” but when you can swoop in and scoop up stocks for a bargain, happy is exactly the emotion the bulls are feeling.

I have two small-cap stocks that I see as excellent buys in this market. Not only have they survived the volatility valiantly, they should be among the first to pick up steam as volume returns to Wall Street.

IPG Photonics (NASDAQ:IPGP) is the world’s leading provider of high-power fiber lasers. These lasers are used in a variety of different devices and applications ranging from materials processing to broadband Internet to medical pumps. Fiber lasers are the next generation of laser technology and offer many advantages over traditional lasers. They are more energy-efficient, they are easier to maintain and they last longer. Given the strong business investment cycle we are in right now, companies are chomping at the bit to upgrade current technologies, and businesses with fiber-laser applications are no exception.

Approach Resources (NASDAQ:AREX) is redefining the American oil industry in the very place where it got its start: Texas. Thanks to companies like Approach Resources, we finally are becoming able to explore our “unconventional” gas and oil reserves. Approach’s largest and most developed drilling property is located in West Texas, where many of the untapped oil and gas reserves are locked in sands and shale formations. Extracting hydrocarbons from these types of rock requires significantly more sophisticated drilling and fracturing technologies than are used in traditional oil well operations. Approach is on the cutting edge of this industry and, thanks to innovations and new research, it is helping to bring down the cost of exploring and developing these oil and gas deposits each year. The company’s success lies in identifying low-risk properties, then implementing its advanced technologies at the lowest possible cost.

For Those Feeling Bearish

If you see the markets’ recent volatility as a sign it’s time to dump stocks, I’m not going to talk you out of selling. There are plenty of stinkers in this market, and while I wouldn’t recommend getting out of this market entirely, I do have a few stocks that you should sell if you’re currently holding onto them.

AK Steel (NYSE:AKS) is the first stock you should sell if you’ve got the itch to dump stocks. This one-time metals and mining powerhouse commanded $70 per share back in 2008, but after a terrible fall that year, it hasn’t crossed the $30 mark since. Earnings have been erratic to say the least, and analysts have decreased their earnings estimates 86% for the upcoming quarter. Sell!

TiVo (NASDAQ:TIVO) is another stock you can sell with confidence. Earnings are expected to be down over last year, and in this market you can’t afford to own companies that aren’t growing sales and earnings. This stock has traded in a narrow range for a year now, and I don’t expect it to break out anytime soon. Get rid of this one if you own it.

For Those in the Fetal Position

Investing paralysis is the worst thing that can happen to you in this market. So for those folks who have been rattled by the market and are so confused about what to do that they haven’t done anything, I have the answer for you. The two low-priced stocks I’m going to tell you about are the perfect first step. Both are trading at under $10 per share, so you can start with a very small investment and build up over time. These stocks have top-notch fundamentals, so you can buy them with confidence. And the kicker is each has the ability to pick up a lot of momentum in not a lot of time, so you’ll see results faster.

Mercer International (NASDAQ:MERC) produces wood pulp from both virgin wood and recycled products. Mercer is unlike any other paper company I’ve seen, though. The company not only is the largest producer of its particular type of pulp in Europe (it also operates in North America and Asia), but it also is rapidly developing a renewable energy division. In one of its mills in Canada, it converts the wood that is left over after the pulp production process to “black liquor” and burns it in a high-pressure boiler to make power. The main advantage this company has over its competitors is its innovation. It has some of the most modern mills in the world and is rapidly improving the efficiency of its processes and pursuing new opportunities where it can (its burgeoning energy business is just one example). This $8 stock is a great buy in this market.

Tii Network Technologies (NASDAQ:TIII) helps protect expensive telecom equipment with its overvoltage surge protection devices. This is especially useful during lightning strikes and power surges. Its Total Failsafe products offer modular station protectors, while its In-Line products protect broadband coaxial cables. Naturally, large telecom carriers like Verizon (NSYE:VZ) are big customers and account for 34% of sales. DirecTV (NASDAQ:DTV), Power & Telephone Supply and TE Connectivity (NYSE:TEL) also are customers. With Verizon and other cellphone providers upgrading to 4G, Tii’s sales will remain very strong. This is a $2 stock that you can feel very comfortable adding to your portfolio today.

For Those Wanting Safety

What if you’re not bullish, bearish or uncertain of what to do? Well, you’re probably among the thousands of investors who are looking for some conservative stocks that will give you an extra level of safety in this market.

Well, the recent market gyrations have shaken the trees, and those stocks still holding fast to the branch are the most likely to make it to harvest. Those stocks that made it through the volatility relatively unscathed are the ones you want to pick up shares in to preserve capital now and grow your wealth in the months to come.

Diamond Foods Inc. (NASDAQ:DMND) is a 99-year-old company that is best known for producing Emerald and Diamond of California, two popular brands of nuts. However, it also owns other popular snack brands, such as Pop Secret and Kettle Brand chips, and is continuing to grow. I especially like Diamond Foods because it is poised to acquire Procter & Gamble‘s (NYSE:PG) Pringles chip operations, a deal valued at $2.05 billion. Adding another product line is smart because American consumers love their snacks, healthy or otherwise. After all, they accommodate our busy schedules and are cheap pick-me-ups for money-conscious consumers. According to market research group Packaged Facts, U.S. retail sales of packaged snacks rose to nearly $64 billion in 2010, and sales are projected to approach $77 billion by 2015! Similarly, it’s estimated that having Pringles on the company’s roster will triple Diamond’s snack business.

Transcend Services Inc. (NASDAQ:TRCR) is a medical transcription company that uses Internet-based technology to turn doctors’ audio patient records into written text. The company has a stellar relationship with its clients, with a client retention rate of 98%. And Transcend Services has just launched Encore, a new medical transcription platform that is aimed at reducing costs and training time for its clients. The company currently serves more than 320 hospitals and health systems, but given its cost- and time-saving products and services, I expect the company to make a major market-share grab this year.


Article printed from InvestorPlace Media, https://investorplace.com/2011/08/a-small-cap-stock-for-every-emotion-ipgp-arex-aks-tivo-merc-tiii-dmnd-trcr/.

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