Next year will be the year of the large cap.
That's a theme I've seen popping up in a number of financial publications recently. And maybe they're right. But who cares about next year? What I want to know is which stocks are going to be the best to hold for the next few decades. That answer, I think, will continue to be small caps. Because .
1. Underfollowed small-cap stocks offer incredible rewards.
2. Wall Street is covering fewer stocks than ever before, making now a great time to start looking for mispriced small caps.
So it's more important than ever to refocus our efforts on finding the best small companies
Our methodology
Unlike Motley Fool Hidden Gems, where our team of just six analysts uses bottom-up, fundamental analysis to ferret out small-cap recommendations, this column uses our Motley Fool CAPS community-intelligence database, where the ideas of thousands of people help uncover promising stocks. The system, which is still in beta testing, asks investors to rate stocks either "outperform" or "underperform." In turn, each investor is rated, as is each stock.
The end result? While only huge companies such as Valero Energy
Drumroll
, please ...
So without further ado, here are five five-star CAPS stocks that few to no professional analysts are covering.
Company |
Mkt. Cap* |
CAPS Users |
Anal. |
Anal. Cons. |
---|---|---|---|---|
21st Century Holding |
$200 |
70 |
1 |
Buy |
Enstar
Group |
$527 |
11 |
0 |
N/A |
IRIS International |
$194 |
30 |
4 |
Buy |
Multi-Color |
$235 |
11 |
3 |
Buy |
Mercer Insurance Group |
$135 |
14 |
0 |
N/A |
*In millions.
As always, these stocks are offered not as formal recommendations, but rather as ideas worth researching further. That said, if you're interested, Enstar Group seems like a very interesting little company. Insiders own more than 40% of shares, and former Goldman Sachs
Of course, Enstar may never live up to that high praise. However, if you'd like to learn more about it or any other undercovered small caps, start by reading through what other investors have to say about them in CAPS. Just click here to join the free beta test today.
Berkshire Hathaway is an Inside Value selection. Valero is a former Hidden Gems pick.
Tim Hanson does not own shares of any company mentioned. The Fool's disclosure policy pities the fool who doesn't have a disclosure policy of his own.