This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

10 Little Stocks With Big Potential

In the early stages of an economic recovery, the stocks of small companies outperform the shares of the big guys.

Take a look at the 3,000 U.S. stocks tracked by the Frank Russell Co. for its indices.

  • So far in 2003, the Russell 1000 stock index, which tracks the performance of the stocks of the largest 1,000 companies, is up 17%.
  • The Russell 2000, which tracks the performance of the smallest 2,000 stocks, is up 32% for the year to date. (The stocks in the Russell 2000 account for about 8% of total market capitalization of the Russell 3000.)
  • Often, as an economic recovery advances, big-company stocks begin making up the difference. That's because these companies can use their massive advantages of scale to reap more than their share of the economic pie.

    Small Victories, Big Gains

    But in this economy, small-company stocks should keep leading the way. That's because the economy is rebounding in this recovery at a slower pace than usual, and it looks like growth will remain relatively modest even as the recovery continues.

    That will play to the leverage that's built into small-company stocks, which are far more likely to react to even modest increases in sales and earnings than big companies. The latter have to show massive increases in sales volume to produce a measurable change in their bottom lines.

    Think of it this way. General Electric (GE) added $668 million in sales in the third quarter of 2003 from the same quarter of 2002. But that was a paltry 2% of the company's $33.4 billion in third-quarter revenue.

    On the other hand, a company like Calavo Growers (CVGW - Get Report), one of the stocks on my list of micro-cap winners, increased sales of its avocados and papayas by a comparatively tiny $4.9 million in the third quarter of its fiscal 2003 from the same period in 2002. But that amounted to a 6.5% increase from the $76 million in sales recorded in the fiscal third quarter of 2002.

    Guess which stock is up more in the last three months? Calavo Growers, which began life as an avocado cooperative in California and bills itself "the first name in avocados," gained 16% in the period. GE is down 1%.
    1 of 4

    Check Out Our Best Services for Investors

    Action Alerts PLUS

    Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

    Product Features:
    • $2.5+ million portfolio
    • Large-cap and dividend focus
    • Intraday trade alerts from Cramer
    Quant Ratings

    Access the tool that DOMINATES the Russell 2000 and the S&P 500.

    Product Features:
    • Buy, hold, or sell recommendations for over 4,300 stocks
    • Unlimited research reports on your favorite stocks
    • A custom stock screener
    Stocks Under $10

    David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

    Product Features:
    • Model portfolio
    • Stocks trading below $10
    • Intraday trade alerts
    14-Days Free
    Only $9.95
    14-Days Free
    Dividend Stock Advisor

    David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

    Product Features:
    • Diversified model portfolio of dividend stocks
    • Updates with exact steps to take - BUY, HOLD, SELL
    Trifecta Stocks

    Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

    Product Features:
    • Model Portfolio
    • Intra Day Trade alerts
    • Access to Quant Ratings
    Real Money

    More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

    Product Features:
    • Access to Jim Cramer's daily blog
    • Intraday commentary and news
    • Real-time trading forums
    Only $49.95
    14-Days Free
    14-Days Free
    APL $0.00 0.00%
    AVD $16.96 2.48%
    CVGW $57.22 0.09%
    GNI $8.10 9.02%
    MBRG $27.00 0.00%


    Chart of I:DJI
    DOW 17,891.16 +117.52 0.66%
    S&P 500 2,081.43 +16.13 0.78%
    NASDAQ 4,817.5940 +42.2360 0.88%

    Free Reports

    Top Rated Stocks Top Rated Funds Top Rated ETFs