The small cap market is tracking at record highs across North America according to analysis by Stan Choe
of the Associated Press, who says experts are forecasting 26 percent growth in 2014 compared with 13 percent for large caps.
An example of a strong small-cap performer is Allegiant Travel (NYSE: ALGT
, Stock Forum
), a company that has delivered 40 profitable quarters with revenue growth every year, despite a downturn in the aviation industry and the effects of 9/11. The company is being aggressive in the marketplace and recently announced a $99 fare to Hawaii
In Canada, LX Ventures (TSX: V.LXV
, Stock Forum
), an incubator that launches, integrates and acquires early stage high-growth tech companies, is proving one to watch, with Traders Digest recently having stated that it may be the next big thing on the tech stage. Its subsidiary, Fodio Technologies Inc., has recently begun commercializing its business and has signed 10 customer agreements
in its first three months of operations.
Choe points to the Oberweis International Opportunities fund, which boasts a 53 percent return on small- and mid-cap stocks over the last year as being evidence of the strength of that market, which is “inventing new products, where one or two new products can really change the fortunes of a company.”
Despite that growth expectation, many of those companies may have already passed the value level. According to data from FactSet, prices on the Standard & Poors 600 index of small stocks are trading at an average of 20 times earnings over the last 12 months, but with value to be had in Canadian resource, oil and gas and tech small-caps, investors will continue to dig for – and find - bargains.
On Monday, LX Ventures dropped 8.7% and was trading at $0.21 a share. The company had a market cap of $7.9 million, based on 38.0 million shares outstanding.