As a full time microcap investor, I have a very easy (easy to comprehend, not to execute) investing strategy. I want to identify a bullish global market trend in its infancy and find the micro caps that will benefit from the trend before any other investor. In general, I want a stock with a gale force tail wind. The perfect situation is a bullish global market trend where there are only a handful of microcap companies that are benefactors. In this scenario a scarcity value occurs which acts like a second tail wind for the stock.
A perfect example of a bullish global market trend where there is only one company that benefits happened two years ago for me. In late 2009/early 2010, the social networking arena really started to heat up with IPO buzz brewing around Facebook. At the time the only publicly traded social network was Quepasa Corp (QPSA). As investors scoured the public company universe for a vehicle to participate in this trend, it lead them to one name: Quepasa Corp (QPSA). This global trend and scarcity effect drove the stock from $3 to $15 over the next 12 months.
Here is a list of some microcaps whose stocks have benefited from this type of phenomena. Sometimes it has led to a short-term share price increase and others had sustained increases:
Zagg Inc (ZAGG) – Mobile Trend – Seen as a derivative of Apple Inc. (AAPL)
Mitek (MITK) – Mobile Trend – Mobile Banking
Acorn Energy (ACFN) – Energy Infrastructure and Surveillance
Lifevantage Corporation (LFVN) – Nutraceuticals
At MicroCapClub we try to identify these types of stocks before they move. On the next MicroCapClub Radio program I’ll be discussing a company that has similar characteristics as Quepasa had in late 2009: An undiscovered, profitable microcap company that is one of the only ways to play what some researchers believe to be the number one global market trend for the next decade.
It is important to stay cognizant of global market trends, niche trends within them, and the participants in the microcap arena that will benefit the most.
Author Disclosure: No Position in any company mentioned
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