Wednesday, August 17, 2011

A Small-Cap Stock for Every Emotion

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tdp2664 InvestorPlace With 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.



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