Little-Known Companies With Lots of 'Precious Assets'

NEW YORK (TheStreet) -- Investors are as nervous as my three cats when their food bowl starts looking empty.

One recent front-page article in the Wall Street Journal opined, "Despite Gains, Many Flee Stock Market." The article tells us that investor disillusionment is widespread and the "percentage of American families who say they own stocks or stock funds slumped to 46% in 2011 from 53% in 2001."

The article also reminds us that since the stock market lows of March 2009, "... Investors have yanked a net $138 billion from mutual funds and exchange-traded funds that invest in U.S. stocks..." This helps explains why for the first time since 1981, investors have withdrawn money from U.S. stock funds for more than a year at a time.

Adding to the angst about stocks is the current banter about the upcoming earnings seasons possibly being the worst quarter since 2009. We'll learn more after Alcoa ( AA) and Yum Brands ( YUM) step into the earnings confessional.

So I want to shout out to all disaffected stock investors and remind them that 1981 was a great year to begin investing in quality stocks, as was March 2009. If you're buying quality, well-run, profitable companies that have almost a monopoly in what they're doing to make money, you should in time do just fine. If those companies are just beginning to receive notoriety and attention, even better!

One such company is a Canadian resource specialist that focuses on what the world needs more of...besides love.

Sprott Resources ( SCPZF) is a small-cap stock that has plenty of upside potential.

From its interesting and descriptive Web site we learn the following:
Sprott Resource Corp. invests and operates through its subsidiaries in the natural resource sector. We currently have investments and operations in oil and gas, agriculture and agricultural nutrients as well as a large position in physical gold bullion. We take an active involvement in the companies in which we invest.
We are dedicated to generating consistently superior returns on capital for our shareholders, while focusing on risk management and real wealth preservation. We seek to accomplish these objectives by acquiring or starting attractive businesses at the right time, growing the value organically or through accretive acquisitions and by maintaining financial flexibility to be responsive to the needs of our businesses and to capitalize on new opportunities.

One of those "attractive businesses" is One Earth Farms, which has become the largest corporate farming operation in Canada. There is also a cooperative partnership between the private sector and the indigenous people of First Nations.

Sprott Resources is the controlling shareholder of One Earth Farms, and when you own shares of SPCFZ it's like investing alongside a billionaire visionary like Eric Sprott, about whom I wrote an article in June.

It's very important to do your own due diligence before investing in any small-cap company. With Sprott Resources you're getting the experience of its renowned founders and top-rate management. They're steering the company towards creating wealth by providing sustainable food production, energy and, in my opinion, the accumulation of the most important "currency" of the 21st century, gold.

Speaking of gold, the other little known company that's making a big name for itself is Sandstorm Gold ( SAND), which is the most recent success story among the few precious metals royalty-streaming companies. In fact its CEO comes from the wildly successful Silver Wheaton ( SLW), which is my single favorite way to play the prospect of silver rising to new all-time highs in the months and years ahead.

Jim Cramer recently interviewed the CEO of Sandstorm and it tells the colorful facts on why this company is another "goose that lays the golden egg."

SAND hit a 52-week high on Oct. 8 of $15.43 and on Oct. 9 sold off 6.64% on over 2.4 million shares traded to close at $14.07. This may be the beginning of the much anticipated correction of this amazing stock.

Look at this one-year price chart including the stock's 200-day moving average, which illustrates how far this stock has skyrocketed. It really needs to come back down to earth and I hope to begin accumulating shares when it gets closer to $11, if indeed it corrects that much.

After Sandstorm reported its stellar 134% year-over-year quarterly earnings growth (as of June 30) only a few analysts and investment educators like Jim Cramer realized how an outstanding business model like SAND creates such remarkable results.

The Vancouver-based company focuses on completing gold purchase agreements with gold mining companies that have advanced stage development projects or operating mines. The company also engages in mine financing business, as well as provides an alternative to gold mining companies in search of capital. It offers cash payment to gold mining companies and in exchange receives the right to purchase a percentage of the gold produced for the life of the mine at a fixed price per ounce.

It is one of only three publicly-traded companies that capitalizes on this highly lucrative opportunity, and the best years for these three -- Franco Nevada ( FNV) and Royal Gold ( RGLD) being the other two -- are directly ahead.

As the central banks of the world do all they can do revive the shaky global economy through massive monetary easing and dilution of their paper currencies, gold and silver are likely to go to yet-to-be realized levels. So will the cost of feeding the world.

Those are just some of the reasons why I'm bullish on companies like Sprott Resources and Sandstorm Gold. Accumulate them while they're correcting and after you've had a chance to convince yourself that these two companies would be precious assets in your portfolio.

As of the time of publication the author has a position in SCPZF.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Jim Cramer and Stephanie Link actively manage a real money portfolio for his charitable trust- enjoy advance notice of every trade, full access to the portfolio, and deep coverage of the latest economic events and market movements.

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