This is a tough market in which to be a new buyer. Despite this, there are some micro-cap stocks to watch. With so much turmoil in the global marketplace, keeping things domestic is probably a reasonable strategy given the current environment.
In this market, there are plenty of extremes for the risk capital speculator to consider. There are some richly valued growth companies as well as some value resource stocks.
What’s clear is that there is no momentum or tailwind available from the broader market. And why should there be? Stocks have done great in the last six years.
Three Micro Cap Stocks to Watch in a Jittery Market
One of the things that have happened in this slow-growth world is that institutional investors have rallied around double-digit growth because there’s very little of it around. This has both advantages and disadvantages. Price momentum is something that can disappear quickly in a market that’s already gone up.
LifeLock, Inc. (NYSE/LOCK)
This is why I like LifeLock, Inc. (NYSE/LOCK). It’s a cybersecurity play, which has been one of the hottest sectors of the stock market lately.
This software company offers identity theft protection services in addition to being a growth business. LifeLock’s most recent quarter surprised to the upside. I think this enterprise can keep its operational momentum in 2016.
Resource investing is always precarious because there’s not only traditional business risk but also the underlying commodity price risk.
With this in mind, the decline in both natural gas and oil prices is a material enough event to warrant some value browsing within this specific sector. (See “Two Stocks to Look at with Oil Prices in the Doldrums.”)
Triangle Petroleum Corporation (NYSEMKT/TPLM)
Triangle Petroleum Corporation (NYSEMKT/TPLM) is a liquid micro-cap with operations in North Dakota and Montana.
Synergy Resources Corporation (NYSEMKT/SYRG)
I also like Synergy Resources Corporation (NYSEMKT/SYRG). This stock has outperformed a lot of its peers by staying mostly flat on the stock market while so many other resource stocks experienced correction.
What’s clear about this specific sector is that there won’t be any upward price momentum until oil and natural gas prices tick meaningfully higher.
Therefore, picking some risk-capital value plays in this specific sector requires a medium-term time horizon for investment. Near-term capital gains in these kinds of stocks are highly unlikely given oil price trading action.
No doubt, this is a tough market in which to be a buyer. A market that’s already gone up is on the cusp of a new interest rate cycle where geopolitical events are wreaking havoc with sentiment.
So there’s absolutely no rush for a buyer. Even this market’s top momentum plays are now experiencing material price retrenchments.
Second-quarter earnings season can’t come soon enough. This market needs the distraction and financial news from the horse’s mouth. But, this market certainly isn’t expecting much in terms of earnings growth. If anything, the numbers have been pretty weak so far.
It’s going to be a tough slog right into the fourth quarter for this stock market.