The market correction hit many small cap stocks hard and that has created some major buying opportunities for longer term investors. A new article states "Small-cap stocks may provide a place to hide." and goes on to say: "...some investors think the parts of the market that sustained the heaviest damage will be best poised for gains. We can easily see how bargain-hunting by small/mid-cap investors can help fuel a short-term rally in small caps, at least as long as expectations for a recession and (exchange traded fund)-driven risk-off trades by hedge funds remain at bay," Lori Calvasina, small-cap analyst for Credit Suisse, wrote in an analysis for clients." Read more on that here.
Here are a number of small cap stocks that have beaten down in the recent correction. These could be poised to rebound soon.
Research Frontiers, Inc. (NASDAQ:REFR) is trading around $3.92. Research Frontiers makes products that control the flow of light and is based in New York. These shares have traded in a range between $3.26 to $10.29 in the last 52 weeks. The 50 day moving average is $4.39 and the 200 day moving average is $5.62. Research Frontiers has really cool technology that allows users to change the tint on glass and regulate the amount of light coming in. This product is going to be used in a moon roof on certain Mercedes models. This would have quite a number of potential applications on many other products. This stock was trading around $6 a couple of months ago and appears to be oversold now.
Sealy Corp. (ZZ) shares are trading at $1.73. Sealy is a maker of mattresses, and is based in North Carolina. These shares have traded in a range between $1.70 to $3.11 in the last 52 weeks. The 50 day moving average is $2.25 and the 200 day moving average is $2.64. Earnings estimates for Sealy are for a profit of 10 cents per share in 2011 and 14 cents for 2012. This stock was trading around $3 earlier this year and insiders were buying shares at that level and just recently bought more on the dip. You can see the insider buying here.
Cenveo, Inc., (NYSE:CVO) is trading around $4.27. CVO is a printing company, based in Connecticut. The 50 day moving average is $5.76 and the 200 day moving average is $5.87. These shares have traded in a range between $4.80 to $7.61 in the last 52 weeks. Earnings estimates for CVO are for a profit of 45 cents per share in 2011 and 55 cents for 2012. Before the recession, these shares traded for over $20 per share and while they probably won't be at those levels anytime soon, they could easily rebound to $6, which is where this stock traded a few weeks ago.
Accuray, Inc. (NASDAQ:ARAY) shares are trading at $4.98. Accuray makes and markets the CyberKnife system, which is a image-guided robotic radio surgery system used to treat tumors. The 50 day moving average is about $7.32 and the 200 day moving average is about $7.78. Earnings estimates are about 5 cents for 2011. This company has a very strong balance sheet with about $142 million in cash, and a book value of $2.98. While this stock has rebound potential, I would like to see insiders buying to help confirm this stock might be a real bargain.
Federal Signal (NYSE:FSS) is trading around $4.86. Federal Signal makes a variety of products for vehicles such sirens, aerial platforms, etc and it is based in Illinois. These shares have traded in a range between $4.39 to $7.79 in the last 52 weeks. The 50 day moving average is $5.93 and the 200 day moving average is $6.38. FSS is estimated to earn about 22 cents per share in 2011 and 59 cents in 2012. FSS pays a 24 cent dividend which is equivalent to a 4.8% yield. This pays you to hold the stock while you wait for a higher share price.
The data is sourced from Yahoo Finance. The information and data is believed to be accurate, but no guarantees or representations are made. Rougemont is not a registered investment advisor and does not provide specific investment advice. The information contained herein is for informational purposes.
Disclosure: I am long ZZ.