Here's a pitch you're not used to hearing if you're a small-cap investor:

"We're a defensive investment."

But if you were at the 5th Annual Roth Capital conference in New York City last week, it was a pitch you heard a lot. There was talk of rising unemployment, slowing consumer spending, and worst of all, prolonged recession. An analyst from SAC Capital told me point blank: "I'm just here for short ideas."

Are you panicking yet?
While "defensive" investments have a place in almost every individual investor's portfolio, they're few and far between in the small-cap sector -- particularly after the torrid run these stocks have had the past few years.

In other words, small caps are no place to play defense. For that, turn to blue-chip consumer behemoths with healthy and sustainable dividends. You know the names: Johnson & Johnson (NYSE:JNJ), Microsoft (NASDAQ:MSFT), Diageo (NYSE:DEO), Procter & Gamble (NYSE:PG), et al.

Now, however, is not the time to panic. And while there were a plethora of potential short ideas at Roth -- cough International Fight League cough -- there were also a lot of alluring opportunities made even more alluring by recent market volatility.

Yes, when others are panicking, it's often time to get greedy.

One worth watching
Case in point is Middleby, a maker of commercial kitchen appliances with a customer list that includes Cheesecake Factory (NASDAQ:CAKE), Yum! Brands (NYSE:YUM), and Papa John's (NASDAQ:PZZA). The longtime Motley Fool Hidden Gems recommendation is up nearly 630% since 2003, but this summer's volatility has provided several compelling buying opportunities -- and may well provide another soon.

Because if you're not familiar with this $1.1 billion firm, CEO Selim Bassoul says there's still a lot to like going forward:

  • The fast-casual restaurant segment is "recession-resistant."
  • An oven replacement cycle is about to hit in full force.
  • The company's recent innovations are going to help customers save on energy and time costs -- a must in the current environment.
  • Middleby "owns the emerging markets," with new technology on the horizon to cook tandoori, shish kebabs, and samosas.

Does this sound like a potential core holding worth buying in weakness?

More where that came from
Middleby is just one of many promising small cap opportunities in today's market -- and there were a number of others at the Roth conference that to my eye looked cheaper and had more upside potential. We're dedicated to finding these opportunities at Hidden Gems and passing them along to our subscribers.

If you'd like to take a look at our top picks for new money now and have access to all of our forthcoming notes from Roth, click here to join Hidden Gems free for 30 days. There's no obligation to subscribe, and you might just find that other people's panic is your profit opportunity.

Tim Hanson does not own shares of any company mentioned. Johnson & Johnson and Diageo are Motley Fool Income Investor recommendations. Microsoft is an Inside Value pick. The Motley Fool has a disclosure policy.