Growth Stocks

First and foremost, I want to congratulate Landon Donovan and the whole U.S. soccer team. While the U.S. vs. Algeria game was a bit more stressful than I would have liked, the forward's winning stoppage-time goal more than made up for my temporary discomfort. I just hope my blood pressure can handle the Ghana game on Saturday!

***In Small Cap Investor Daily, I spill a lot of ink talking about growth stocks. You're probably reading this daily in hopes of finding the next True Religion (NASDAQ: TRLG), a small-cap company that saw its stock price rise over 2000% after I recommended it. These outsized gains are what got me into the small-cap game initially, but I also like to keep an eye out for dividend paying small-caps. All investors should have exposure to income stocks, and the small-cap asset class is one that many overlook at their own peril.

Right now, we're seeing a lot of stocks moving horizontally. In fact, I expect the major averages to mostly trade sideways over the summer months. Gaining this week and dropping back down the next. Investors are trying to determine whether this market is a bear or a bull, or some weird hybrid capable of devouring us all. In this kind of uncertain market I suggest taking a look at dividend paying small-caps.

The World Cup is kicking it into high gear. Every day now four matches are played and the advancing teams are decided. Each group plays its games simultaneously, thus preventing the kind of collusion that happened in Spain in 1982 between Austria and West Germany. That poor excuse for a competition was shocking - a far cry from the exciting upsets occurring daily in South Africa.

Of course sports fans, like investors, know that without oversight there is an uneven playing field.

The big news on yesterday’s solstice wasn’t the beautiful weather in the northeast, or the extra hours of sunlight. Rather the headline news was that China is depegging the renminbi (or yuan). After months of petulant U.S. lawmakers clamoring for an appreciation of the Chinese currency, Beijing has finally relented. The Chinese currency will now fluctuate. Global markets bounced yesterday in response to the world’s largest country allowing the undervalued yuan to rise.

The process will be gradual, perhaps painfully so, but this Chinese policy shift is a good sign for global investors. For one, it’s a strong vote of confidence in the world’s economic recovery, as well as a signal that Chinese consumers can bolster their economy with increased domestic demand.

It's happening...

Most of the major media outlets are now publishing articles about silver - and more specifically that silver is inexpensive right now.

It's taken some time, and usually when we see a story become widespread it's time to exit the trade and move on to something else. But not in this case: there are several reasons why silver is still an attractive investments right now.

In fact, I just added a silver mining small cap company to the Small Cap Investor PRO portfolio so subscribers can capitalize on the opportunity in silver right now. Since I added it shares have risen 9 percent. I have a 'buy up to' price on shares that is rapidly approaching - so if you're interested in a great small cap silver miner you should check this company out soon. Click here to find out more about this great little company.

As another week draws to a close, I thought I’d take some time to answer a few of the questions sent in by readers. I love getting feedback about my stock recommendations, the news, or your own strategies as small-cap investors. Keep the emails coming!

Our first question comes from Byron:

I have 1000 shares of LEI and was wondering if you think this small energy company is a good investment or might be a buyout candidate? It has been going up pretty good lately and I am trying to decide whether to hold for greater gains or cash in.  If it might be a take-over target, I might hold it for a while longer. What do you think?

As the week draws to a close, there's palpable relief among market watchers. Through Thursday, all the major indexes are up over 1%. Small-caps stocks continue to lead the broader market, supported in large part by an expected pick up in acquisitions. As deals are expected to play such a large role in the small-cap space, I thought now might be a good time to talk about Mergers and Acquisitions (M&A).

I know that for many, the term M&A conjures up images of corporate raiders and liquidation sales. From movies like Wall Street to Tommy Boy, Hollywood is rife with examples of M&A evildoers and the plucky, independent businessmen who foil them.

The South African soccer team hasn’t quite pulled off the home-town win in the World Cup yet - but I'm not worried. The host country, one that many point to as an underdog, has plenty of shots - the first being today when they face Uruguay at 2:30 eastern. 

Even if South Africa becomes the only host country never to make it out of group play, they’ve still scored a major win with these games. Much like the Beijing Olympics were China’s debutante ball, so these games are South Africa’s coming of age party.

Risk-averse investors say that investing in China right now is like investing in 1908 U.S., and investing in Africa is like investing in 1808 U.S. They see Africa as the last frontier of emerging markets, a Wild, Wild West for capital, and are hesitant to put money to work there just yet.

Like many of you, I’ve spent time watching the World Cup soccer tournament this week. The event has spurred my interest in African stocks and ETFs - especially since the emerging economy shares some common characteristics with the small cap asset class. Most notably, the country is compelling for investors with a risk appetite, similar to the risk appetite of small cap investors. And like small cap investors, emerging market investors have their appetites rewarded by the potential for massive upside. So I'll discuss specific investment ideas that I come across as the tournament progresses.

I recently read that many employers are trying to figure out how to best maintain productivity levels as workers around the world flock to any medium possible to watch these world-class matches. Unfortunately, they haven’t found a cure yet.

I hope everyone had a great weekend. After a busy couple of weeks, I finally linked together two relaxing days and found time to read the paper at home. I had forgotten how nice this was, and while not all of the news these days is positive it was still nice to relax with a cup of coffee and digest world events.

I thought I’d start off this Monday by digesting the big news events in the world. Small cap stocks are following the macro-economic trends - so we need to keep an ear to the ground and understand what's going on.

What are the ramifications of "debt explosion" in the Western world today?  That's the question that Niall Ferguson, Harvard Professor of History and Business Administration sought to answer recently.

His conclusion?

The United States is actually worse off than the PIGS (Portugal, Italy, Greece, and Spain)