Small-cap buys exist in current market
Mary Lisanti, president of Lisanti Capital Growth, told CNBC this morning that in the shattered market there are still small cap buys.
“[Small caps] survive and prosper by the uniqueness of the product and service that they offer,” Lisanti told CNBC. “So they tend to be recession resistant, which is counter intuitive, but it’s actually what happens at the growth end of the market.”
A normal drop in a recession for small caps is about 25% to 30%, and we’re almost at that point for small caps according to Lisanti.
Lisanti says it’s best to have a long-term time frame when investing in small caps.
“When you look at a year or more, I think that’s really when you’ll make your most money. Small caps tend to lead the market coming out because they have earnings growth,” she said. “So we find a lot of companies that are still growing in this market. They have cash, so they’re not impacted by the credit crisis, and they have something unique and different that they do and that’s really the trick to small caps.”
Specific small caps Lisanti favors include ICON plc (Nasdaq: ICLR), which provides outsourced development services to the pharmaceutical, biotechnology, and medical device industries, and Carrizo Oil & Gas Inc. (Nasdaq: CRZO), an oil and natural gas play. She also favors Rubicon Technology, Inc. (Nasdaq: RBCN), which sells monocrystalline sapphire and other crystalline products for light-emitting diodes, radio frequency integrated circuits and optoelectronics.
