Consider These 3 Small-Cap Stocks

The Federal Reserve cut interest rates as expected on Wednesday by a quarter point as was widely expected. Interestingly there were three dissenters on the 10-person committee. Two members wanted to hold rates steady while another thought a half percent cut was more appropriate given the current state of the global economy. Despite the interest rate reduction, the markets broke a three-week winning streak last week. The Dow was down approximately 1%, while the S&P 500 and NASDAQ had more modest losses. The Russell 2000, which has been the leading index over this weekly win streak, dropped just over 1% on the week as small caps saw some profit taking/consolidation after their recent rally. However, the market remains within shouting distance from its all-time highs in July despite continued trade tensions and a dearth of solid economic activity outside the United States. On the trade front, the latest Chinese delegation left talks early as negotiations continue to ebb and flow as both sides have dug in. Both China and U.S. made some minor concessions earlier in the week. Despite a slowing economy, new tariffs and continued trade tensions, the U.S. remains the best house in a bad neighborhood at the moment. GDP will not grow at the 3% percent level in 2018, but solid growth of 2% appears what will be achieved in 2019. Unemployment remains near 50-year lows and wage growth remains robust. Today, we finish off a three-part series around overlooked small cap stocks. On Wednesday, we covered some small biotech stocks with favorable risk/reward profiles. On Friday, we highlighted a few small caps that should continue to ride improve housing activity. Today, we look at a few undervalued small cap concerns outside those two sectors of the market. Let's start with TriState Capital Holdings . This is Pittsburgh-based bank holding company with three wholly owned subsidiaries, including a Pennsylvania chartered bank, an investment advisor, and a broker/dealer. Despite impressive organic loan growth and some diversification with its investment management business, shares of TSC lost approximately one-third of their value from September of last year to the start of September this year, owing mostly to concerns about the inverted yield curve which contracts net interest margin. However, the shares have started to recover as yields have moved up some recently. Insiders own almost 20% of the shares and the stock trades at a significant price-to-book discount to peers. Refiner PBF Energy looks oversold to me and may be trying to be putting in a bottom here. The shares yield nearly 5%. In addition, a beneficial owner continues to gobble up shares. He has added more than $15 million to his stake in September so far, which now totals nearly 15% of the company. Finally, we have Telenav . This small cap concern provides connected car and location-based platform services. Earlier this month the stock dropped by half due to reaction that General Motors has granted a new contract to Alphabet . However, Google Apps will not start being made available in GM cars until the 2021 model year at the earliest. In addition, Telenav still has a partnership and contract with GM through the 2025 model year. Finally, GM represents just 18% of the company's overall revenues at the moment. The company came out with an announcement and this unexpected development will not affect its profit forecasts for 2019, 2020 or 2021, and has reiterated its previous guidance. The stock seems to be trying to form a bottom in recent sessions after the big fall. (Alphabet is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells GOOGL? Learn more now.)

Consider These 3 Small-Cap Stocks

We look at a few overlooked and undervalued small cap concerns.

Columnist Conversation

Mr. Buffett Said: 'I couldn't find anything worth buying'

Thoughts on Stocks, Credit and the Reopening

Large CEO Buy Last Week in Essent Group (ESNT)

COLUMNIST TWEETS

Please Join or Log In to manage and receive alerts.