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Why I’m Buying Small Caps on Sale

By Matt McCallMar 28, 2020


There is nothing I hate more than people who use scare tactics for personal gain. Especially right now. Come to find out, Bill Ackman, the hedge fund CEO of Pershing Capital who loves sparring with other billionaires in the media, was buying up some of the very stocks he was warning us about last week.

That’s because it never pays to bet against America.

The truth is, we’ve all seen this cycle play out before. The previous financial crisis of 2008-2009 spooked investors so much that shares of some of the largest and most well-respected companies got crushed. Does the market go straight up after something like that? No. But people who heard the knock of opportunity set themselves up for serious upside.

That’s why I’m hosting a free webinar on Wednesday – Part 2 of my Crisis & Opportunity Investment Summit – highlighting the road map that helped me navigate the markets back in ’08 and ’09. (You can reserve your spot by clicking here.)

One key to hearing the knock of opportunity is knowing that the pendulum swings even further for smaller companies. Here’s what I mean…

When markets move into a correction or bear market, small-cap stocks tend to fall more than their larger counterparts. One reason behind this is that people believe small caps are riskier, so they sell them first.

Right now, the P/E ratio for the S&P SmallCap 600 Index is 13.6, well below that of the larger companies. It has only been this low three other times in the last 15 years – 2008, 2011, and 2018). All three times were great long-term buying opportunities.

Here’s another way to look at this:

Did every one of the world’s most innovative, most revolutionary technologies suddenly get 50% less valuable?

Did the massive potential for artificial intelligence or electric vehicles or personalized medicine or the coming ultra-powerful 5G network suddenly fall by 50%?

As I hope I’ve made clear here in MoneyWire, that’s not the case at all. Technology is more critical than ever as the world responds to the global coronavirus outbreak. And going forward, I think it’ll really hit home for folks how much of a game-changer it is.

With that in mind, I’m preparing to issue my #1 stock recommendation at Wednesday’s event. I’ve never shared this stock with anyone before, and it’s perfectly positioned to climb 1,000% or more in gains over the next few years. And, just so we’re all on the same page in this volatile market, it’s completely free to everyone – just RSVP for the event by clicking here.

My main message to you today is that there’s huge financial opportunity here for long-term investors, as we are in Early Stage Investor and my other investing services.

In a market panic, small-cap companies can go on “fire sale.” They can fall 30%… 40%… 50%… even 60%+, despite their businesses not being impacted anywhere near that much.

Think of it like a “fire sale” at a store or other business, where they start selling their goods at crazy discounts. No, it’s still not worth buying everything in the store – but for items that are worthwhile, you can go ahead and stock up for the long term. And when prices come roaring back, you’ll be glad you did.

For those of us interested in making 10 times our money on a single investment, we want to look at precisely these kinds of small-cap stocks.

It’s much, much easier for a young $500 million small cap to grow 10-fold than it is for a mature $500 billion giant to grow 10-fold. The small cap is operating from a much smaller base.

And in a market recovery, that kind of growth – and, often, way more – is very possible among the best small caps. History shows this…

Consider Dexcom (DXCM), which builds and sells glucose monitoring devices for diabetes management. On October 1, 2007, the stock reached a high of $10.91. By November 20, 2009, it was down 88% to $1.36 with a market valuation of $41.4 million. It then soared an incredible 19,130%.

Or Patrick Industries (PATK), a parts manufacturer for the recreational vehicle and manufactured housing sector. The stock hit a high of $8.12 on July 20, 2007. When it reached its low of $0.10 on March 19, 2009, it had plunged 99% and boasted a market cap of just $2.3 million. That was a fire sale price, as the stock went on to rally an eye-popping 33,590%.

Capturing even a portion of that would not only help you recover from any losses sustained in this recent crash. It could be life changing.

That’s why it’s critical that we look past the current panic and keep the long-term picture in mind. That means investing in innovative technologies. Shares may be down in the panic, but their long-term potential is extraordinary.

If you have cash to invest, be sure to join us on Wednesday, April 1 at 7 p.m. ET at Part 2 of my Crisis & Opportunity Investment Summit, where I’m giving away the name of my #1 favorite stock to position yourself for these uncertain times and for the long road ahead.

It has nothing to do with gold, government bonds, or any other type of “safe haven” assets. It’s an overlooked stock I uncovered using the same bear-market road map that earned me gains as high as 2,235%, 1,423%, and 1,502% over the years.

Or just look back at the better-known stocks:

In the financial crisis, when stocks fell 60%-70%, you could have picked up Amazon (AMZN) for as low as $34.68 per share. In 2020, a single Amazon share reached above $2,000.

Netflix (NFLX) dropped as low as $2.56. This year, it climbed above $380.

Nvidia (NVDA) was going for $5.75 per share. It recently reached over $310.

I see similar life-changing returns on the horizon. Stocks have rallied from bear markets to all-time highs every single time. We’re seeing signs of progress in fighting and containing the coronavirus. And help is on the way in the form of a massive injection of economic stimulus from the federal government.

However you feel about the stimulus bill itself, remember: The U.S. economy was solid before this crisis, and investing in America now can help us get back there. The other side of this panic is a massive stock rally.

P.S. I bet only one in 1,000 people have heard of the stock I’ll be recommending at the free Crisis & Opportunity Investment Summit on Wednesday, April 1 at 7 p.m. ET. But it could hand you 1,000% or more over the next several years.

The road map that helped me navigate the markets back in ’08 and ’09 is the single best shot you have at not only recouping your recent losses but ultimately growing your money.

And to thank you for showing up to this emergency stock market briefing, I’ll give you my newest special report called “The 5 Best Blue Chip Stocks to Buy Now.” It’s my gift to you for simply attending. Once again, you can sign up by clicking here.

Matt McCall’s MoneyLine Podcast

Click here to listen to Matt McCall’s MoneyLine podcast! This week, Matt discusses the latest action in the market. While the market sold off on Friday, things aren’t looking too bad. Is the bear market done? Are there still great deals out there for long-term investors? Matt says there are.

You can subscribe to this podcast on iTunes, Stitcher, Spotify, or wherever you listen to podcasts.

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