There’s no doubt in my mind that 2009 is going to be a tough year for the economy and the stock market, but I have to say that I’m encouraged by a number of growing, nimble, small companies in the marketplace that are braving the storm.
The volatility in the marketplace is a sign that investment risk remains very high. That’s why I’m so encouraged when I find companies in the marketplace that are outperforming.
Take PetMed Express, Inc. (NASDAQ/PETS), for example. This small company just reported very good financial results that beat Wall Street expectations. Its business seems well-positioned to manage a slowing economy and it’s buying its own shares back in droves.
Another small company that’s doing well in the current landscape is China Security & Surveillance Technology, Inc. (NYSE/CSR). I think the security business is great, and particularly great in an economy like China’s, which has enormous infrastructure requirements.
This company just announced another major contract with an entire city in China to provide citywide traffic monitoring and surveillance. The value of the contract is over sixty-seven million dollars and is a real testament to the success this small company has achieved in just a few years.
When you focus on the headlines, it’s very easy to get discouraged about what’s happening in the global marketplace. As an investor (or should I say speculator), this can really make you take your eye off the ball. I know a lot of speculators are just sitting on the sidelines.
There are lots of great companies out there with stock prices that are very reasonable. The time horizon for expected returns from these stocks has expanded, but, at the end of the day, that’s the nature of the equity speculation business. You can’t control the marketplace. All you can do is make calculated bets on growing businesses.