From the desk of Steve Strazza @Sstrazza
Welcome to our latest Minor Leaguers report.
We've already had some great trades come out of this Small-Cap focused column since we launched it late last year and began rotating it with our flagship bottoms-up scan, "Under The Hood."
To make the cut for our Minor Leagues list, a company must have a market cap between $1 and $2B. After applying price and liquidity filters, we simply sort by proximity to new highs in order to focus on the best players.
The goal is to catch the strongest names while they're small and still have serious upside potential. If any of these stocks ever climb the ranks to the big leagues, the returns could be huge. We're looking at 5-10x moves just to break into large-cap land!
And what better time than now to launch a small-cap-focused column? We've seen robust evidence of structural rotation down the market cap scale, suggesting a new period of outperformance from small-caps in the coming months and quarters... Maybe even years.
Minor Leaguers is a great way to take advantage of that trend.
Let's dive in and check out this week's list of the hottest stocks in the Minor Leagues.
Despite the primary trend being undeniably higher, small caps have remained a choppy mess for more than 3 months now.
Regardless of the market environment, there will always be winners and losers coming out of this universe. But when we get a period of volatility or selling pressure as we're now experiencing, it can give us valuable insight as to which stocks are likely to be leaders once the corrective phase passes.
That's why we embrace times like these and use them to prepare for when the market inevitably begins trending again.
Finding these leaders is simple. They're typically the very same stocks that are "bucking the trend" during selloffs or in rangebound environments. This price behavior is indicative of continued and sustained relative strength in the future.
Since we sort our list by proximity to all-time highs, all the stocks in this table are potential future leaders!
Not only have they shown impressive relative strength -- they also continue to make new highs on an absolute basis! With that as our backdrop, let's take the field and outline this week's most favorable setups.
Batter up!
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