Year-to-date, small capitalization equities have rallied alongside the broad market, as bullish momentum continues to be a dominating force and investors become more risk tolerant. These stocks typically offer more promising long-term growth potential than their large cap counterparts; however, investors will have to take on slightly higher levels of risk and volatility. Already this year, the Russell 2000 Index has surged more than 20%, urging investors to take a closer look at these promising securities [for more commodity news and analysis subscribe to our free newsletter].
For those looking to make a small cap play in the commodity space, we highlight four compelling U.S.-listed options (data as of 7/24/2013):
Core Laboratories NV (CLB): Headquartered in Amsterdam, this small-cap oil and gas equipment and services company has been in business since 1936. Core Laboratories specializes in their proprietary and patented reservoir description, production enhancement, and reservoir management services. The company operates in more than 50 countries and provides services to increase total recovery from existing fields to some of the world’s top oil companies. The stock’s EPS is around $4.82 and currently yields 0.80%. Year-to-date, Core Laboratories shares have surged nearly 35% [see Fracking: The Modern Day Gold Rush].
CVR Energy, Inc (CVI): This Texas-based firm engages in petroleum refining and nitrogen fertilizer manufacturing activities across the United States. CVR owns and operates coking medium-sour crude oil refineries and crude oil gathering systems in Kansas and Oklahoma. The company also owns a pipeline system that transports crude oil from Caney, Kansas to its refinery. The stock currently boasts an EPS of $6.51 and a whopping 6.60% yield. So far in 2013, CVI has rallied more than 70%.
Junior Miners – Diamonds In The Rough
Alamos Gold Inc (AGI): Based in Toronto, this small cap gold mining company is relatively young – having started operations in 1994. The company owns the 30,536 hectare Salamandra group of concessions located in the state of Sonora, Mexico. Included in the Salamandra group is the Mulatos Mine and several other prospective exploration targets. Alamos also just recently acquired Orsa Ventures Corp, another junior exploration company with operations in the Western U.S. (which includes the Qauartz Mountain Property in Oregon). But as with all mining companies in 2013, Alamos has suffered losses this year with the stock shedding nearly 20% year-to-date [see How To Lose Money Investing In Commodities].
Silvercorp Metals Inc (SVM): Headquartered in Vancouver, this junior miner’s operations is focused on China’s vast unexplored geological potential. After first entering China in 2003, Silvercorp has grown to be the country’s leading silver producer; in 2011, the company produced 5.3 million ounces of silver, as well as 69 million pounds of lead and 16.3 million pounds of zinc. Year-to-date, however, the stock has fallen nearly 40%. Silvercorp shares currently yield 3.50% and hold an EPS of $0.16.
Disclosure: No positions at time of writing