Oh great seer, it's incredible that somebody of your purported preeminence does not have the brain cells to watch the trends that have taken shape here.
While you have been unjustifiably fixated on gold, the Russell 2000 has been skyrocketing. So have my JOSB, SYNA, ROXI, and ESST. And you might want to look at SU for an oil play.
And marky here's an incredible tip because I feel so sorry for you - buy MSN at the initial trade ask. It will easily outperform JBLU the next 5 mos -trust me. (i hope you didn't join the herd to buy JBLU)
anyway,
THINK SMALL, CARRY BIG STICK
SAN FRANCISCO (CBS.MW) - The silver linings in this year's range-bound stock market are the pint-sized companies.
The stocks few of us pay attention to are kicking booty. Small-cap stock indexes, led by the Standard & Poor's 600 Small Cap Index, are up 10 percent this year and almost 50 percent since September. The small companies, average market capitalization of $600 million, put in a fine
2001, too - up 11 percent.
Joseph Duarte, a Texas anesthesiologist who also writes financial books and manages money for wealthy clients, says booming business for restaurants, oil drillers, gold miners, medical device makers and small semiconductor companies are benefiting the small-cap indexes.
The small-stock story is one spread across hundreds of different, sometimes funky stories, each tale centered on a company or industry that is cash-flow positive, can endure in good times and bad and has experienced an event that alters its fiscal landscape.
"One of my all time favorites, ICU Medical (ICUI), makes needle-less intravenous fluid administration sets," says Duarte from his River Willow Capital Management office in Dallas. "Bill Clinton signed a regulation in his last days of office that mandates needle-less I.V. fluid administration sets. That means all hospitals, surgery centers, dialysis centers, clinics, ERs, doctor's offices have to use them."
The S&P 600 Small-Cap Index holds at least 10 different sectors:
energy, materials, industrials, consumer discretionary, consumer staple, health care, financial, information technology, telecommunications and utilities.
Little known fact: the index can be bought as a security, the exchange traded fund IJR (IJR). The American Stock Exchange-traded fund is up 12 percent this year. Another security, the IJH (IJH), repres ents the S&P
Mid-Cap 400 Index. It's up 9 percent since Jan. 2.
In contrast, the big stocks, represented by the S&P 500 Index, are down about 1 percent for the year. Some of their biggest members, like IBM, AOL Time Warner, Cisco Systems and General Electric, are trading under a cloud these days.
Last year at this time, it was the same story: the small-cap indexes were up about 9 percent for the previous 12 months against an 11 percent drop for the S&P 500.
The small stocks are clearly benefiting from a move by some investors to basic themes in an iffy world economy. For example, Lone Star Technologies (LSS), a $650 million maker of tubing and other gizmos for oil drillers, is seen as benefiting soon from greater efforts to find oil in the United States, which hopes to reduce its reliance on
Venezuela, Saudi Arabia and other large suppliers of crude oil. Lone Star's stock is surging.
Prime Hospitality (PDQ), a small operator of roadside inns, falls in the no-surprises category. It runs 230 or so hotels in the United States and is about as boring, and safe, a company as an investor is bound to come across these days.
Whole Foods Markets (WFMI) has seen its shares more than double in the past 12 months. People have to eat, and they're willing to eat high-priced, fresh produce and multi-grain breads, even while they're watching parts of the Middle East blow itself to pieces.
The small-cap crowd has its high-octane constituents as well. These include the semiconductor makers, a group whose performance is powering the current Nasdaq mini-rally. Varian Semiconductor (VSEA) is typical: a rapidly rising stock that has sent the small company's market apitalization above $1 billion, even with sales of its chip equipment falling sharply in the most recent reported quarter.
Duarte, author of several books on energy and biotechnology investing, likes shares of Coinstar (CSTR). "The company that operates the supermarket self-service coin counting machines is a good example of a small stock with promise," says Duarte. "Excellent rising revenue rate and it turned profitable two quarters ago."
Of course, with the high-fliers like Coinstar comes the baggage:
"There's a huge price-earnings ratio to consider," he says. (On my screen, Coinstart's stock price is 461 times the company's profit for the past four reported quarters. "But clearly this is a stock under accumulation," Duarte says. |
