Best 2021 Small-Cap Rebound Stocks To Buy Now
Or so you’d think.
The Ever Given, the ship that clogged the Suez Canal for nearly a week, has been freed.
The backlog of 400 ships created by it has cleared through the canal.
The excitement among logisticians, however, is likely to be short-lived.
The world’s transportation networks are facing a major problem, and it’s only getting worse.
Industry insiders are already spotting some major warning signs of a slow-motion crisis.
For investors, however, it’s creating a tremendous opportunity.
And there’s a handful of small-cap stocks that have been left out of the current rally.
But they could catch up fast, and deliver big gains to investors who spot this opportunity now.
20X Bigger Than Amazon
$400 million per hour.
That’s what Lloyd’s List, a London-based publisher that has been reporting shipping rates since the 18th century, estimated how much Ever Given blockage of the Suez Canal cost.
It’s a staggering amount of money. To put it in perspective, Amazon only generates about $20 million per hour. This incident cost 20 times that.
But it’s all fixed up now, and everything is back to normal.
And that’s where the real problems — and real opportunities — begin.
Here’s the set up.
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Profits Flow From Top To Bottom
One of the best ways to find investment opportunities with strong near-term profit potential, is to find situations with high and rising prices.
I’m not talking about high and rising stock prices though.
Instead, I’m focused on high prices for products or services without a drop-off in demand from customers.
For example, if a company raises the price of the product or service it sells to customers, and demand doesn’t drop as a result, buy it. Hold it. Because a big payday is coming.
Spotting these high and rising prices early would have pointed you to some of the most successful investments of the last decade.
Netflix (NASDAQ:NFLX) is a perfect example of a company that has successfully raised prices.
The streaming giant has slowly ratched prices up from around $8 per month when it first offered “unlimited streaming”, to $18 per month today.
While prices were rising, Netflix was not losing customers, it was actually gaining tens of millions of new ones.
Netflix’s raising prices were a clear indicator this company had some major growth ahead of it (and it did).
But it’s not just Netflix. There are many more examples.
The cryptocurrency rallies over the last few years are another example.
Stratospheric cryptocurrency prices have propelled demand for graphic processing units (GPUs) which are the processing power behind cryptocurrency mining.
GPU prices have soared right along with crypto in the last few years.
As you might expect, GPU makers like NVIDIA (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD), have seen their shares soar right along with cryptocurrencies.
Apple (NASDAQ: AAPL) is another example because, well, everything Apple does is expensive.
And again, Apple’s high prices for its products and services haven’t deterred its growth one bit.
There are endless examples of high prices pointing to big profits for investors, but you get the point.
Higher prices in a sector, driven by increased demand, limited supply, or both, are usually followed by big gains for investors who spot the opportunity early.
That’s where the current market and the entire Suez situation come into play.
Because we have another situation where we’re seeing rising prices, customers lining up to pay them at higher rates — and the stocks set to benefit from them just starting to move.
The Last Best Way To Play The Economic Recovery
The first thing I looked at when the Suez shut down was shipping rates and shipping stocks.
The chart below shows the Freightos Baltic Container Index, which tracks the cost of moving a shipping container worth of goods:
The Index — and therefore the cost of shipping a container of goods — has soared over the past year.
The upswing throughout the last year wasn’t a big surprise.
We came across this when researching WellTech investment opportunities like in Peloton (NASDAQ:PTON).
Consumer demand is still strong for many products that need to be moved around the world while the pandemic is still creating major delays for product deliveries.
That’s creating a supply-demand imbalance in shipping where demand is high, supply is tight, and shipping rates are going to go up.
However, shipping stocks have been one of the strongest post-crisis recovery stocks around.
Breakwave Dry Bulk Shipping ETF (NYSE:BDRY) has fully recovered from the 2020 downturn.
And the largest shipping container company, A.P. MOELLER-MAERSK A/S (USOTC:AMKBY), which owns more than 700 ships, is back to all-time highs it hasn’t seen since 2013.
So with no obvious opportunity there, we went down the logistics chain in search of opportunities that haven’t already taken off.
That’s where something truly interesting appeared — in trucking.
What we spotted was a case of truckers charging high prices and truck tonnage (a measure of demand for trucking freight service) actually increasing right along with it.
Just look at the American Trucking Association’s (ATA) Truck Tonnage Index, which tracks the gross tonnage of freight that is transported by motor carriers in the US, to see what’s happening.
Here’s the chart:
As you can see, truck tonnage still hasn’t fully recovered from the pandemic.
This is an anomaly because, as we can tell by the container shipping rate increase of more than 300%, the demand for transportation is there, it just hasn’t fully reached the last line of the logistics sector yet.
The way things are looking economically though, trucking demand is on the rise and could be fully recovered by the end of the year.
And if it does, you are going to want to buy trucking stocks now.
Here’s the best of the trucking sector with the greatest room to grow from here.
Trucking Stocks In The Driver’s Seat
The three largest trucking companies in the USA are Knight-Swift Transportation (NYSE: KNX), JB Hunt (NASDAQ: JBHT), and YRC Worldwide.
These are the titans of the trucking sector.
With the exception of YRC Worldwide (which was bailed out last year and is 29% owned by the U.S. Treasury), shares of the other two trucking giants have fully recovered and are now both trading about 40% above where they were a few years ago.
But with business on the verge of booming, we want to be looking at the small-cap truckers that will benefit the most from a trucking industry rebound.
That’s why we expect the real action to be in smaller players like Yellow (NASDAQ: YELL), Daseke (NASDAQ: DSKE), and US Truck (NASDAQ: USAK).
All of these three small-cap trucking stocks have recovered from their 2020 lows, but, as a group, they would still have to rise another 50% to get back to their highs last seen in 2017.
Given the state of the trucking industry, that could come sooner rather than later.
Founder, Dear Retail Investors
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