From the desk of Steve Strazza @Sstrazza
Ultimately, to make the cut for our Minor Leagues list, you must have a market cap between $1 and $2B. There are also price and liquidity filters.
Then, we simply sort by proximity to new highs in order to focus on the best players only.
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 land!
And what better time than now to launch a small-cap-focused column? We’ve seen robust 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… Maybe even years.
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.
Despite the primary trend being undeniably higher on both a relative and absolute basis, small-caps have been a choppy mess for over 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 have now, it can give us valuable insight as to which stocks are likely to be leaders once the corrective phase passes. For this reason, we really embrace times like these and use them to prepare for when the market inevitably begins trending again.
Finding these leaders is simple as they are typically the very same stocks that are “bucking the trend” during selloffs or rangebound environments like the current one. This kind of price behavior is indicative of continued and sustained relative strength.
And since we sort our list by proximity to all-time highs, all of the stocks in this table are potential future leaders!
Not only have they shown impressive relative strength, but they 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.
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