7 Stock Picks

Are you looking for a few hidden stock gems as the market climbs higher? You’re probably familiar with big cap names like Facebook, Apple, Amazon, and so on, but what about smaller companies? Here are seven stocks that may justify a look.

Altra Industrial Motion (AIMC). Altra Industrial Motion Corp is a United States-based company that designs, manufactures, and markets mechanical power transmission components. The company’s reportable segments are Power Transmission Technologies, which includes Couplings, Clutches and Brakes, Electromagnetic Clutches and Brakes, and Gearings; and Automation and Specialty segment consist of Kollmorgen, Portescap, Thomson, and Jacobs Vehicle Systems. It generates a majority of its revenue from the Power Transmission Technologies segment.

Bloom Energy (BE). Bloom Energy Corp is engaged in providing electric power solutions. The solution of the company includes Bloom Energy server, which is a stationary power generation platform to provide uninterrupted power. It earns revenue from the sale and installation of its energy servers to direct and lease customers, provides services under its operations and maintenance contracts, and by selling electricity to customers under PPA agreements.

Clarus (CLAR). Clarus Corp engages in the design, manufacture, and marketing of outdoor equipment and apparel for climbing, mountaineering, backpacking, skiing, and other outdoor recreation activities. The company’s products are principally sold under the Black Diamond, Sierra, and PIEPS names through specialty and online retailers, distributors, and original equipment manufacturers throughout the U.S. and internationally. The operating segments of the company are Black Diamond, which is the core revenue generator, and Sierra. Black Diamond segment offers products including high-performance activity-based apparel, rock-climbing footwear and equipment; technical backpacks and high-end day packs; trekking poles; headlamps, and lanterns; gloves and mittens; and skincare and other sport-enhancing products.

iRadimed (IRMD). iRadimed Corp is a US-based company that mainly develops, manufactures, markets, and distributes a Magnetic Resonance Imaging (MRI) compatible intravenous (IV) infusion pump system, and MRI compatible patient vital signs monitoring system, and accessories and services relating to them. The company provides a non-magnetic IV infusion pump system which is designed to be safe for use during MRI procedures. The MRI products of the company are sold primarily to hospitals and acute care facilities in the United States and internationally.

Malibu Boats (MBUU). Malibu Boats Inc designs, manufacture, and sells performance sports boats. The boats are used for water sports, such as water-skiing, wakeboarding, and wake surfing. The performance boats are sold under the Malibu and Axis Wake Research brands. The company uses an independent dealer network to sell its products, primarily in the United States and other countries. It operates under the segments of US, Australia, and Cobalt. The U.S. operating segment primarily serves markets in North America, South America, Europe, and Asia while the Australia operating segment principally serves the Australian and New Zealand markets.

PaySign (PAYS). PaySign Inc is a prepaid debit card payment solutions provider as well as an integrated payment processor that has many prepaid debit cards in its portfolio. It designs and develops payment solutions, prepaid card programs, and customized payment services. Through the platform, it provides services, including transaction processing, cardholder enrollment, value loading, cardholder account management, reporting, and customer service. It manages programs for many of the pharmaceutical manufacturers with co-pay assistance products designed to maximize new patient acquisition, retention, and adherence.

The Meet Group (MEET). MEET s a leading provider of interactive live streaming solutions designed to meet the universal need for human connection. The company’s ecosystem of live-streaming apps enables users to interact through one-to-many live streaming broadcasts and text-based conversations. The apps, MeetMe, LOVOO, Skout, Tagged, and Growlr deliver live interactions and meaningful connections to millions of users daily.

All you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don’t work out.” – Peter Lynch

June 18, 2020

Bill Parrott, CFP®, is the President and CEO of Parrott Wealth Management located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process so our clients can pursue a life of purpose. Our firm does not have an asset or fee minimum, and we work with anybody who needs financial help regardless of age, income, or asset level. PWM’s custodian is TD Ameritrade, and our annual fee starts at .5% of your assets and drops depending on the level of your assets.

Note: Investments are not guaranteed and do involve risk. Your returns may differ from those posted in this blog. PWM is not a tax advisor, nor do we give tax advice. Please consult your tax advisor for items that are specific to your situation. Options involve risk and aren’t suitable for every investor.

Disclaimer: Names, data, and descriptions are from Ycharts. PWM does not own any individual positions in the seven securities. The post is not an offer to buy or sell securities.

 

Weekly Stock Market Update

Happy Friday,

The stock market is closed today in observance of Good Friday.

The S&P 500 gained 10.4% this week, the best weekly performance since 1974 as the Federal Reserve unleashed another $2.3 trillion in lending for small businesses, cities, and states. The stock market has risen 27.5% from the low on March 23.

Our models continue to rebalance weekly to keep your asset allocation and risk tolerance in check. This week our models purchased small-cap stocks, which rose 15.3%. A few weeks ago, we bought real estate holdings, and they were up 20.5% this week.

The central theme for our models is diversification because we never know which sector will take the lead. It’s like a horse race. When the horses enter the gate, we do not know which one is going to win. The lead will change several times during the race, but when it’s over, one horse will come in first, one will finish last, and the remainder of the field will fall somewhere in between.

I grew up near Santa Anita Race Track in Arcadia, California, and I went to the races often. A former neighbor of mine entered the horse racing business, and I asked him how he trained successful horses. He said, “Sometimes you just got to let ‘em run.” We’re letting our models run.

We’re entering the earning season, and it won’t be pretty as companies will report terrible news. However, this news is baked into the market. If it’s “less bad,” it will be good. Make sense? Companies will write off as much as they can this year, so next year their balance sheets look immaculate. The stock market is forward-looking, so it has already set its sites on next year.

Here’s how stocks, bonds, and other asset classes performed this past week.

  • The S&P 500 rose 10.4%
  • The NASDAQ rose 7.9%
  • International Stocks rose 6.6%
  • Emerging Markets rose 4.5%
  • Long-Term Bonds fell 1.6%
  • Gold rose 4.4%
  • Oil fell 3.5%
  • Chinese Stocks rose 2.6%

In Punjuab, a city in northern India, the residents can see the Himalayan mountain range for the first time in thirty years as pollution has dropped during the global shutdown. Here’s the article: https://www.cnn.com/travel/article/himalayas-visible-lockdown-india-scli-intl/index.html

Astronaut Scott Kelly spent a year in space, and he dealt with isolation by staying busy, committing to a daily plan, keeping a journal, following a schedule, going outside, and participating in a hobby. Here’s the article: https://www.nytimes.com/2020/03/21/opinion/scott-kelly-coronavirus-isolation.html

“When I first looked back at the Earth, standing on the Moon, I cried.” ~ Alan Shepherd

Have a great weekend, and keep the faith!

Sincerely,

Bill Parrott, CFP®

President and CEO

Parrott Wealth Management

www.parrottwealth.com

 

Croatia

Croatia is the second smallest country to reach the World Cup Final, a tiny nation of 4.1 million people located on the shores of the Adriatic Sea. It ranks as the 128th largest country in the world and accounts for about .054% of the global population. If it were a state, it would rank 27th nestled between Kentucky and Oregon.

UBS gave Germany a 24% chance to win the World Cup after running 10,000 simulations.[1] Brazil, Spain and England were also expected to finish strong. The 17-page report highlighted all the reasons why Germany would win along with the odds for each country. Croatia was given a .2% chance to win.

Large countries, with all the pomp and circumstance, get the major headlines, small countries not so much. Like countries, large-cap stocks get most of the press. Companies like Facebook, Amazon, Apple, Netflix, and Google make news and move markets. Small-cap stocks are an afterthought.

Small-cap stocks are doing well this year, up 11.5%. This sector of the market has benefited from what they don’t have. They don’t have a large international presence so they’re (fairly) immune to the trade war and a strong dollar.

The Microcap sector is also performing well. They account for about 3% of the U.S. equity market with an average market-cap of about $500 million. Apple, by comparison, is approaching one trillion. The Dimensional Fund US Micro Cap Portfolio (DFSCX) has generated an average annual return of 12.13% since 1981. A $10,000 investment when the fund opened is now worth $656,638. Year-to-date it has risen 10.02%.[2]

Small cap outperformance is not new. Since 1980, the Russell 2000 Small-cap index has returned 11% per year. Dating back to 1926, $1 invested in small-cap stocks grew to $22,985 by the end of 2017. While large-cap stocks ended with a value of $7,347.[3]

As you build your portfolio don’t ignore small companies because they can give your investments a big boost.

Piglet noticed that even though he had a very small heart, it could hold a rather large amount of gratitude. ~ A.A. Milne

July 17, 2018

Bill Parrott is the President and CEO of Parrott Wealth Management firm located in Austin, Texas. Parrott Wealth Management is a fee-only, fiduciary, registered investment advisor firm. Our goal is to remove complexity, confusion, and worry from the investment and financial planning process.

Note: Investments are not guaranteed and do involve risk. Your returns may differ than those posted in this blog.

 

[1] https://www.bloomberg.com/news/articles/2018-05-17/germany-will-win-the-world-cup-ubs-says-after-10-000-simulations, Adam Blenford, May 17, 2018

[2] Morningstar Office Hypothetical Tool

[3] Dimensional Fund Advisors Investment Principles