Tags: Stock | small | market | S&P

USA Today: Digi International Might Provide Safe Harbor in Market Crash

By    |   Thursday, 28 May 2015 09:00 AM

With the S&P 500 index having tripled in the last six years and now standing less than 1 percent below its record high, many experts are worried about a crash. So which stocks offer safety in the event of a market meltdown?

USA Today, using data from S&P Capital IQ chose nine stocks. They are small-cap issues (market capitalization of $400 million or less) that are members of the S&P 1500 index and trade for 50 percent valuation discounts to the average of stocks in the index.

Three of the stocks are technology company Digi International (DGII), Monarch Casino & Resort (MCRI) and apparel seller Christopher & Banks (CBK).

"Why does all this matter?" writes USA Today's Matt Krantz. "Academic studies have shown top-performing stocks over the long haul tend to be ones that carry valuations that are below the market's."

Small-cap stocks "also have been demonstrated to be top performers," he says. "Combine these two traits and magic happens."

Rounding out the rest of the list are Bel Fuse (BELF.B), Pericom Semiconductor (PSEM), Cohu (COHU), DSP Group (DSPG), Kopin (KOPN) and CryoLife (CRY).

As for investor fears, "we have been expecting the market break out to new highs, but the rally has been a lot less exciting than we hoped for," Andrew Adams, chief market technician at Raymond James, tells MarketWatch.

“What this tells us is that it's a traders' market — people are making very short-term bets and are staying away from big long positions, because valuations are high."

The S&P 500 carried a price-earnings ratio of 21.58 last Friday, up from 18.04 a year earlier, according to Birinyi Associates.

The breadth of the market's recent rise has been unimpressive, Adams notes, and trading volume is thin.

Lance Roberts, a portfolio manager at STA Wealth, is bullish on stocks for the short term. But he tells MarketWatch that he's worried about the long term due to lofty valuations, weak earnings and economic sluggishness.

The S&P 500 is headed for an earnings gain of only 0.3 percent for the first quarter, analysts estimate, according to FactSet. And the economy grew only 0.2 percent in the first quarter.

© 2019 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
StreetTalk
With the S&P 500 index having tripled in the last six years and now standing less than 1 percent below its record high, many experts are worried about a crash. So which stocks offer safety in the event of a market meltdown?
Stock, small, market, S&P
359
2015-00-28
Thursday, 28 May 2015 09:00 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved