Daily Archives: May 18, 2018

Growth Stocks, Uncategorized

10 Little-Known Stocks That Could Be Huge

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The 10-year U.S. Treasury has crossed the rubicon. It is now flashing a yield that is over the 3% mark. What befalls the economy when that happens? Recession? Correction? A grinding bear market?

Nope. Nothing really. It is more a measure of inflation and economic growth, and far more psychological than it is a real indicator of something significant.

But the kernel of truth that it does represent is a new stage of growth in the economy. The big, safe stocks will keep chugging along, but smaller companies can grow faster than big ones in a faster-paced economy.

That means asset managers — and smart individual investors — will start moving money into small- and mid-cap stocks to take advantage of accelerating growth.

Below are 10 little-known stocks that could be huge in coming years, and now is a good time to establish a foothold, while they’re still cheap and relatively undiscovered. Just remember, these stocks will be volatile, so don’t expect a smooth ride.

Little-Known Stocks to Buy: Mastech Digital (MHH)

Little-Known Stocks to Buy: Mastech Digital (MHH)

Source: Shutterstock

Mastech Digital Inc (NYSEAMERICAN:MHH) is up 67% year to date and has a market cap of a mere $92 million.

MHH is a 21st century version of a temp firm. It’s a temp firm to IT personnel.

The thing is, millennials and Gen Zers are not looking to be the kind of 9-5 employees that previous generations considered the way to go about a career position.

Coders, devs, systems admins, etc. don’t see systems in a 9-5 world. The tech world is 24/7, so when they work is more flexible and not as predictable. They work around the tech. And that makes Mastech a great draw for talent as well as clients. Plus, many of these jobs are high paying, so Mastech has great margins, since it’s not trying to sell desk jockeys or maintenance workers.

Little-Known Stocks to Buy: Summit State Bank (SSBI)

Little-Known Stocks to Buy: Summit State Bank (SSBI)

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Summit State Bank (NASDAQ:SSBI) is a small commercial bank headquartered in Santa Rosa, CA, which is just north of Silicon Valley and San Francisco.

When the economy starts to expand, it creates more opportunities for entrepreneurs to strike out on their own. And there are few sectors where this trend is more reliable than tech.

As a bank focused on getting involved in small and medium-sized businesses, SSBI should see a lot of business in coming quarters. Already this year, SSBI stock is up more than 20% and it’s still delivering a 3.1% dividend on top of that.

And as rates rise, that gives SSBI more ability to generate higher profits between what it borrows at and what it lends at.

Little-Known Stocks to Buy: Northern Technologies (NTIC)

Little-Known Stocks to Buy: Northern Technologies (NTIC)

Northern Technologies International Corporation(NASDAQ:NTIC) is one of those companies that has built a strong reputation in the industries it serves but is such a niche player, many investors outside these industries don’t know it exists.

And as a firm with a $144 million market cap, it also has gotten lost in the big-cap buying that has dominated the markets for so long.

But it deserves its day in the sun, which has arrived.

Founded in 1970, NTIC specializes in corrosion inhibiting products and corrosion management solutions, predominantly for the oil and gas business. Think about keeping tank farms rust free, or keeping equipment on drilling platforms — either on land or offshore — operational and free of rust. It’s a big job, and NTIC is one of the industry leaders.

As U.S. energy production rises, so will the fortunes of NTIC.

Little-Known Stocks to Buy: Synalloy (SYNL)

 

Little-Known Stocks to Buy: Synalloy (SYNL)

Source: Maciek Lulko (Modified)

Synalloy Corp (NASDAQ:SYNL) makes stainless steel and carbon steel piping as well as specialty chemicals. That alone isn’t going to get many heartbeats racing.

However, when you add to this description that it specializes in the oil and gas industry and has been a player there since 1945, your pulse may quicken a bit.

Its chemicals are used to maintain tank farms as well as water storage containers (think fracking wastewater). Its pipes are in demand on rigs, in storage farms and at fracking operations.

As the U.S. energy industry starts to build, so will the opportunities for SYNL.

Up almost 39% year to date, with a $163 million market cap, there’s still plenty of growth left here.

Little-Known Stocks to Buy: Baycom (BCML)

Little-Known Stocks to Buy: Baycom (BCML)

BayCom Corp (NASDAQ:BCML) is a $1.2 billion bank that is located just outside San Francisco, in Walnut Creek, CA. After trading over the counter for a while, in late April it IPO’d on NASDAQ.

The IPO brought in an additional $50 million and it currently trades with a market cap around $240 million.

BCML has been on an acquisition run of late and it looks like it’s focusing on buying local banks in tech-centric areas. This would fit into the new strategy in banking where some of these boutique banks focus on helping get small and medium-sized business up and running instead losing this business to VCs.

Since this is a new iteration of BCML stock, the bet here is that its past success will be multiplied now that it has more capital access.

Little-Known Stocks to Buy:Sinovac (SVA)

Little-Known Stocks to Buy:Sinovac (SVA)

Source: Shutterstock

Sinovac Biotech Ltd. (NASDAQ:SVA) is a native Chinese biotech company that is focused on the Chinese market, and its key drugs are vaccines.

This is interesting on two fronts. First, vaccines are a good way for Chinese firms to enter into the pharmaceutical business because they are highly beneficial and if made locally, can be very cost effective.

For a nation that is looking to move from developing nation status to developed nation status, a healthy population and a solid healthcare system is an important factor.

Given this, SVA will get support from the government as it builds its expertise and reputation. What’s more, vaccines are proving to be highly effective in treating certain diseases as well as preventing them. This next-generation of vaccines could have significant potential.

But for now, the Chinese demand for improved native healthcare solutions is a key driver.

Little-Known Stocks to Buy: Legacy Resources (LGCY)

Little-Known Stocks to Buy: Legacy Resources (LGCY)

Source: Shutterstock

Legacy Resources LP (NASDAQ:LGCY) is an oil and gas limited partnership that focuses on exploration and production of properties in Texas, the Rocky Mountains and mid-continent fields.

The stock has risen from around $1 a share in the past year to about $8 today. And its market cap is almost $650 million at this point.

Just remember, LGCY is leveraged to the price of oil and natural gas. This is fundamentally a leveraged bet on energy prices. Also, the Donald Trump administration has talked about changing the rules related to limited partnerships, which may affect LGCY’s 7.2% dividend.

But at this point, with the summer driving season upon us, this one looks like it has some legs left, especially if tensions in the Middle East continue to run high.

Little-Known Stocks to Buy: Profire Energy (PFIE)

Little-Known Stocks to Buy: Profire Energy (PFIE)

Source: Shutterstock

Profire Energy, Inc. (NASDAQ:PFIE) is a niche player in the oil and natural gas sector. And as this sector makes its resurgence along with the global economy, its business is ready to grow.

As a matter of fact, PFIE stock is already up 140% so far this year.

Profire specializes in burner management. In the oil and natural gas industry, various equipment like line heaters, separators, dehydrators and amine reboilers are used to make and transport petrochemicals. These applications require heat, and that’s where PFIE products come into play.

Founded in Canada, it has reach across the entire North American energy patch. And as more pipelines and wellheads open up, so will PFIE’s business.

Little-Known Stocks to Buy: Xcerra (XCRA)

Little-Known Stocks to Buy: Xcerra (XCRA)

Source: Shutterstock

Xcerra Corp (NASDAQ:XCRA) is fundamentally in the business of making and operating semiconductor testing equipment.

While this has been a traditionally cyclical market, the fact is, now that more and more “dumb” devices are now becoming “smart,” chipmakers are able to create longer tails on their chip production. That makes the lag between new generations of chips shorter and provides more stability for companies like XCRA.

Also, since there are growing uses for chips, XCRA is in a much better position than big chipmakers since they are constantly under pressure to innovate to keep up with current technological demands, whereas XCRA simply needs to make sure its diagnostic and performance equipment can deliver the results clients are looking for.

Up  38% this year, and sporting a $745 million market cap, this one could be moving up to the mid-cap sector pretty soon.

Little-Known Stocks to Buy: SunRun (RUN)

Little-Known Stocks to Buy: SunRun (RUN)

Source: Shutterstock

SunRun Inc (NASDAQ:RUN) is a solar company that focuses on residential rooftop solar.

Alternative energy stocks have been up and down since the Trump administration has taken office. When subsidies and government support were coming apart and energy was put into reviving fossil fuel industries, renewables were under threat.

But recent tariff talk, especially regarding China, has given a boost to renewables again. China has been dumping solar panels on the U.S. market, hurting domestic producers.

Also, solar has hit an inflection point, and many companies are building in financing options for solar panels and more and more consumers are seeing the advantages of energy savings and independence.

Up more than 80% year to date, and carrying a respectable $1.2 billion market cap, RUN is a good choice in this growth sector.

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Source: Investor Place 

Uncategorized

Just How Long It Takes for Your Retirement Account to Recover From a Correction

You can work your tail off, live below your means, save like a miser, invest like the experts, build a great retirement nest egg – and still end up with virtually nothing!

Don’t take the bait!

The hypocrisy of some financial professionals isn’t funny when you are talking about your life savings.

When I have discussions with licensed financial professionals, one of the first questions I ask is if they believe in diversification. The answer is emphatically “Yes!” Next question – “Why?”

I normally get an education about investing in non-correlated assets for protection. “Protection from what?”, I ask. The common answer is, “To protect from a catastrophic loss in your portfolio.” OK, so far….

I then ask about stop losses. I’d urge all readers to ask these questions to your financial advisor. While the answers vary; all too often they tell me not to worry, the market always comes back. They may produce graphs to prove their point, and the market does come back – eventually!

I’ll then ask, “If the market suffers a 40% drop or more, can you guarantee it will come back in my lifetime?” No, they can’t!

Here is what they leave out

NASDAQ.com tells us that on March 9, 2000 the NASDAQ set a new record – $5,046.86. The next time it set a new record was on May 27, 2015. In real numbers it took 15 years to come back.

How much buying power was lost to inflation over that 15-year period?

The US Inflation Calculator gives us a better picture:

When adjusting for inflation, the buying power of NASDAQ recovered on January 11, 2018. On 3/31/2018 the NASDAQ closed at $7,063.44. While the NASDAQ briefly passed the previous (inflation-adjusted) high, today it has less buying power than 18 years ago.

The S&P 500 fared a little better. Reuters reports:

  • “March 24, 2000: The S&P 500 index reaches an all-time intraday high of $1,552.87”
  • “March 9, 2009: S&P 500 closes at $676.53.”

Once again, let’s factor inflation into the picture:

When adjusted for inflation, it took almost 17 years (Dec. 2016), and a wild ride, for the S&P to recover the same buying power.

Some believe diversification, coupled with a commitment to buy and hold, is the ultimate protection. How many baby boomers would have the willpower to hang on while their portfolio drops almost 60% between 2000-2009? Can you afford to have your life savings remain stagnant for almost two decades?

Stop losses protect against a catastrophic loss resulting from a market crash. Instead of riding the market all the way down, and hoping/praying for it to return, you sell and limit your losses. Baby boomers have a shorter time frame and may not be able to patiently wait for the market to come back.

Another danger seldom discussed

A market crash isn’t the only threat to your life savings. Ask your financial advisor about how you are protected against inflation like we experienced during the Carter years – or perhaps worse.

You’ll likely get a variety of responses. Don’t be fooled with Treasury Inflation Protected Securities (TIPS). By design, they do not offer any “portfolio” protection; they only protect the money you have invested in them. The rest of your portfolio is still at risk.

Ask about gold and precious metals. Many financial professionals warn me gold is much too risky and pays no interest or dividends. I know of only one financial advisor that strongly recommends gold.

Many will point to quotes like this:

“These are people who believe that gold is, to use John Maynard Keynes’s famous description, a “barbarous relic”. Many world-class investors (such as Warren Buffett) believe that gold is just a shiny rock that has little or no intrinsic value.”

Which is it, a great inflation hedge or “a shiny rock with little or no intrinsic value”?

In 2008, when the market tanked, interest rates set historic lows. Investors were inundated with pundits predicting inflation spiraling out of control while gold and silver prices skyrocketed. I also felt it was just a matter of time before our currency collapsed. The Fed is continuing to print money hand over fist, yet somehow, the inevitable collapse has not happened.

Should gold be looked upon as a stop loss – another form of insurance protecting from a catastrophic loss? Should investors be glad we’ve not seen high inflation, despite holding a percentage of their portfolio in gold?

In this article, “Inflation Is Quietly Poisoning Your Retirement Nest Egg”, I outlined a difficult truth:

THE DIFFICULT TRUTHSaving a lot of money to supplement your social security/retirement income is merely a start. Investing wisely and protecting your buying power are major factors in allowing you to retire comfortably.

I looked at inflation of several items over the last 50 years; Federal spending, a gallon of gas, a dozen eggs, a gallon of milk, a loaf of bread, an ounce of gold and the S&P 500.

The first two columns show what each item cost in 1967 and in 2017. Column 3 (Cost-inflation adjusted) calculates what each item would cost if they rose at the government reported inflation rate. Column 4 is the difference between the actual cost and the inflation-adjusted cost. It was an eye-opener.

Federal government spending increased by approximately 146% above the inflation rate. Gas prices followed inflation. Eggs, milk, and bread are actually lower. Gold rose approximately 300% above the rate of inflation. The S&P was up approximately 175% over the 50-year period.

I’d be speculating why the inflation-adjusted price of food declined. I was surprised; particularly because of the high cost of federal regulations piled upon American businesses. Perhaps it is through efficiency and market competition. If that’s the case, free market capitalism appears to be alive and well.

The “Great Society” was launched by President Johnson in the mid-1960’s. At the time, I said the government was incentivizing out of wedlock birth and the welfare population would rise. Regardless of the cause, government spending has far surpassed the inflation rate and is doing so on borrowed money.

The stock market has outpaced inflation. A conservative investor will have a portion in the market for that reason; just keep your stop losses current.

When comparing the buying power of an ounce of gold versus gas, eggs, milk and bread over the last 50 years, gold has performed very well.

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What does this mean?

In the aforementioned article, we looked at the Carter years. Inflation between 1977 & 1982 was 59.9%.

The S&P 500 increased from $96.86 to $133.00 (37%) and gold rose from $133.77 to $400.00 (300%). Unfortunately, many diligent savers and investors lost a lot of buying power in a five-year period due to inadequate inflation protection. In many cases, the buying power was lost forever!

Stocks and gold have historically performed well. I’m sure investment artwork, farmland, and other collectibles also have a history of keeping up with inflation.

While no one can predict the future, a well-diversified portfolio should provide adequate income, protect the investor against long and short-term market corrections, and adequately hedge against inflation.

Following is a list of questions you should ask yourself, your broker and financial advisor:

  • Is your portfolio diversified offering realistic protection against catastrophic losses?
  • After a major market drop, are you comfortable that it will return to its previous inflation-adjusted high in your lifetime?
  • Do you have stop losses in place to protect from a significant market downturn?
  • Do you feel that runaway government spending will inevitably cause high inflation?
  • If we experience 60% inflation like we did during the Carter years, is the buying power of your life saving adequately protected?

Vague answers and “trust me” won’t cut it, get the facts and make sure you are totally comfortable!

I’ve come to the conclusion that gold serves the same role as a stop loss – helping to insure and protect my life savings from the most catastrophic threat of all – runaway inflation.

With government spending and debt exploding as it has, I’m surprised we haven’t already experienced Carter type inflation once again. The Federal Reserve has magically managed to keep the market levitated and inflation reasonable. How much longer can this continue? No one knows; it’s uncharted territory.

I hope to never experience the horrible Carter year type of inflation again; however, I’m not selling any of my metals. Inevitably the dollar will lose a great deal of value in a short period of time. If not in my lifetime – our heirs will find their precious metal coins to be quite valuable.

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