From the desk of Steve Strazza @Sstrazza
In our continued effort to identify individual equities that fit within our larger Macro thesis, we recently rolled out our latest bottoms-up scan: “The Minor Leaguers.”
We’ve already had some great trades come out of this column and couldn’t be happier about the early feedback.
Moving forward, we’ll be rotating this column with “Under The Hood” each week.
In order to make it onto our Minor League list, you must have a market cap between $1 and $2B. There are also price and liquidity filters.
Then, we simply sort the stocks by their percentage from new highs. Easy done.
The idea is to catch the strongest names while they’re still small and have serious upside potential. If any of these stocks ever climb up the ranks to the big-leagues, just imagine the returns. We’re looking at 5-10x moves just to break into large-cap status!
And what better time than now to launch a small-cap focused column? We’ve seen very strong evidence of a structural rotation down the market cap scale, suggesting a new period of outperformance from small-caps in the coming months and quarters.
This column 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.
With small-caps under pressure as a group over the past few months, the ones holding up the best are doing so for a reason. Since we sort our list by proximity to all-time highs, all of the stocks in the table below have been exhibiting some very bullish relative strength despite the lackluster action from small-caps at the index level.
All of these names are trading within 4% of their highs. As always, this kind of leadership is something we love to see.
Now let’s dive in and outline some favorable setups within our universe of the strongest small-caps.
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