Newsletter Subject

Smart Money Monday - Profitable Small Caps Are Dirt Cheap

From

mauldineconomics.com

Email Address

subscribers@mauldineconomics.com

Sent On

Mon, Feb 7, 2022 03:12 PM

Email Preheader Text

You’re looking at the wrong index  Feb 7, 2022 Profitable Small Caps Are Dirt Cheap Profitabl

You’re looking at the wrong index [Read this article on our website.]( [Smart Money Monday]  Feb 7, 2022 Profitable Small Caps Are Dirt Cheap Profitable small caps are dirt cheap. Take a look at the chart below. It shows the forward P/E, a common valuation metric, for the S&P SmallCap 600. Source: Yardeni.com At a low-teens multiple of forward earnings, the index hasn’t been this cheap since the coronavirus crash in early 2020. And it’s flirting with all-time record lows not seen since the depths of the 2008 financial crisis. - The key word here is profitable. When analysts (including yours truly) talk about small-cap stocks, [they usually cite the Russell 2000](. The index includes the 2,000 smallest companies in the Russell 3000, which tracks the 3,000 largest US companies by market cap. A company doesn’t need to turn a profit to land in the Russell 2000. It just needs to be a US company of a certain size. - The S&P indices work a little differently… Companies can’t get in the club if they don’t make money. Specifically, a company must have made a profit for the past four quarters to get a spot in the S&P 500. And the same rule applies to the S&P SmallCap 600, which tracks companies with market caps from $850 million to $3.6 billion. Normally, we focus on individual companies here at Smart Money Monday. However, if we were going to buy a small-cap index, the S&P SmallCap 600 would be the one. It automatically hands you profitable companies. And again, it’s insanely cheap. - This is all to say, there are great bargains in small-cap stocks right now. I’m following two in particular… AdvanSix (ASIX), a chemical company that Honeywell (HON) spun off in 2016, trades at 8 times earnings. That is extraordinarily cheap. The business is somewhat cyclical. But if it gets back to a market multiple—somewhere around 15─17 times earnings—you’d end up with a cool double on the stock. Another bargain bin option is children’s clothing retailer Children’s Place (PLCE). It trades for just 6.5 times trailing earnings, which is too cheap. Keep in mind, Children’s Place generates over half of its revenue from ecommerce. And management has done an excellent job reducing the company’s brick and mortar store count, since it caters to young, tech-savvy parents. So, its future looks bright. But at 6.5X earnings, the market isn’t giving Children’s Place much credit. We’re adding AdvanSix and Children’s Place to our watchlist today. I’ll let you know if and when it’s time to buy. [Video] Thompson Clark shares his #1 Wealth Accelerator, which could potentially shoot up 1,000% or more. [Watch the presentation now]( Monday Mailbag Many of you wrote in asking for more details about the Series I Bond, [the US government bond paying 7%+](. As you’ll recall, the Series I is tied to inflation. Buying it now locks in a 7.12% return until May. At that point, the government will recalculate the yield, based in part on the latest CPI-U reading. It’s a compelling opportunity. I don’t know where inflation will be in May. But even if it’s cooled off a bit, to say, 4%–5%, it would translate into a nice return on a virtually risk-free investment. Now, your questions— Leif wrote: This sounds good, Thompson, but what happens to the I Bond price as inflation increases? Won't the sales price drop accordingly, canceling out the interest paid? The I Bond is a little different than other bonds. It doesn’t trade on the open market. You can put in up to $10,000, and the US government guarantees you’ll get that money back. Remember, the interest rate on the Series I Bond has two pieces: the composite rate and the inflation rate. The government sets the composite rate, and it is somewhat arbitrary. Right now, it’s 0%. The inflation component comes from the CPI-U. That begs the question—if the CPI shrinks could you see negative returns? In other words, would you lose money? The answer is no. The return on the Series I Bond should never drop below zero. Rebecca wrote: Any idea if you can buy this bond in your kids’ names? Yes! However, every recipient is limited to $10,000 per year. When you buy the bond as a gift, you enter the recipient’s Social Security number. So, buying for your kids is pretty straightforward. Again, [the TreasuryDirect website]( offers a pretty good overview of the Series I Bond. And you can buy it there, too. I enjoy reading your questions and appreciate your feedback. You can always reach me at subscribers@mauldineconomics.com. Thanks for reading, [Thompson Clark] —Thompson Clark Editor, Smart Money Monday Suggested Reading... How Low Will We Go? A correction in the stock market is underway. [More details...](  Doing this for 8 minutes a week could change your life [More details...]( [Thompson Clark]Thompson Clark is a small-cap expert and value-focused investor with nearly a decade of experience in financial publishing. Thompson graduated from the Goizueta Business School at Emory University in 2010 with a focus in finance and accounting. He lives in North Carolina. He is the editor of Mauldin Economics’ free research service, [Smart Money Monday](. Don't let friends miss this timely insight— share it with your network now. [Facebook]( [Twitter]( [Email]( Share Your Thoughts on This Article [Post a Comment]( [Read important disclosures here.]( YOUR USE OF THESE MATERIALS IS SUBJECT TO THE TERMS OF THESE DISCLOSURES.  This email was sent as part of your subscription to Smart Money Monday. [To update your email preferences click here.]( Mauldin Economics, LLC | [PO Box 192495 | Dallas, TX 75219](#) Copyright © 2022 Mauldin Economics. All Rights Reserved.

Marketing emails from mauldineconomics.com

View More
Sent On

02/12/2024

Sent On

08/11/2024

Sent On

01/10/2024

Sent On

27/09/2024

Sent On

20/09/2024

Sent On

13/09/2024

Email Content Statistics

Subscribe Now

Subject Line Length

Data shows that subject lines with 6 to 10 words generated 21 percent higher open rate.

Subscribe Now

Average in this category

Subscribe Now

Number of Words

The more words in the content, the more time the user will need to spend reading. Get straight to the point with catchy short phrases and interesting photos and graphics.

Subscribe Now

Average in this category

Subscribe Now

Number of Images

More images or large images might cause the email to load slower. Aim for a balance of words and images.

Subscribe Now

Average in this category

Subscribe Now

Time to Read

Longer reading time requires more attention and patience from users. Aim for short phrases and catchy keywords.

Subscribe Now

Average in this category

Subscribe Now

Predicted open rate

Subscribe Now

Spam Score

Spam score is determined by a large number of checks performed on the content of the email. For the best delivery results, it is advised to lower your spam score as much as possible.

Subscribe Now

Flesch reading score

Flesch reading score measures how complex a text is. The lower the score, the more difficult the text is to read. The Flesch readability score uses the average length of your sentences (measured by the number of words) and the average number of syllables per word in an equation to calculate the reading ease. Text with a very high Flesch reading ease score (about 100) is straightforward and easy to read, with short sentences and no words of more than two syllables. Usually, a reading ease score of 60-70 is considered acceptable/normal for web copy.

Subscribe Now

Technologies

What powers this email? Every email we receive is parsed to determine the sending ESP and any additional email technologies used.

Subscribe Now

Email Size (not include images)

Font Used

No. Font Name
Subscribe Now

Copyright © 2019–2025 SimilarMail.