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Buy ’Em on Red: A Small-Cap Recommendation

by | Sep 29, 2021

Hey, folks, I’m going to make this one short and sweet… As I mentioned, the bears came out in full force Tuesday, freaking out about a 1.5% 10-year Treasury rate.

As usual, the financial media reacted poorly, to say the least, focusing on nonsense like House Speaker Nancy Pelosi, crypto and China. But they’re all missing the obvious: a much bigger ramp-up happened from January to March.

And during those months, we saw the entire market go up as the meme-stonk extravaganza exploded. So as we head into the fourth quarter, let’s look where the media isn’t focused and give you a small-cap stock recommendation off of our weekly watchlist. 

Now, I know I’ve said we need to move away from small-cap stocks as we head into stagflation. But the economy isn’t quite there yet, though, I’m sure it’s on the horizon.

A Free Small-Cap Stock Recommendation

In the first quarter of this year, when interest rates and markets rose, there were a few things we could focus on: The technology, Financials, Energy and Consumer Discretionary sectors, and crypto and small-cap garbage stocks.

So why not bring back the era of the garbage stock? 

The reason we want to target small caps is that while they’ve underperformed other sectors for the past three months, they didn’t crash… They just consolidated.

Source: Bloomberg

Now with the delta variant in decline, it will prove to be a positive catalyst for earnings in Q4, and small companies that struggled last year will have easy year-over-year comparisons.

With that in mind, let’s take a look at a member of the watchlist from a couple of weeks ago. Although it’s not a new addition, we couldn’t capitalize on it then.

But we can now…

The iShares Russell 2000 ETF (NYSEArca: IWM), which tracks the small-cap-filled Russell 2000, was down Wednesday. 

And you know my thoughts on that: Buy it on red!

Good luck, and I’ll be back Friday with a deep dive into the markets and this week in general, so keep an eye on your inboxes.

All the best,

Matt Warder

Fortune Research

WRITTEN BY<br>Matt Warder

Matt Warder

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