Often times during market corrections, like the one we recently experienced, investors sell stocks indiscriminately. This panic selling can create good buying opportunities for longer-term investors.
Consider the primary catalyst behind the recent market selloff: China. Economic growth there is slowing (even according to their own dubious data), their stock market bubble has burst, and the country has devalued its currency. This sent shock waves throughout the global financial markets.
This could certainly be bad news for a lot of U.S. companies. Some firms have significant operations in China or rely on the emerging market to drive high commodity prices.
However, there are many companies with virtually no exposure to China, even in today’s global marketplace. And most recent economic data here in the United States continues to point to decent growth. Additionally, domestic firms with primarily U.S. operations aren’t exposed to foreign currency issues.
Nonetheless, many of their stocks were punished right along with the rest of the market. This pullback could prove to be a great buying opportunity for these stocks.
5 Domestic Small Cap Value Stocks
I ran a screen in Research Wizard that looked for U.S.-focused small cap stocks with positive earnings momentum trading at reasonable prices.
Here are 5 of the top names from the list:
Express (EXPR – Snapshot Report)
Market Cap: $1,605 million
Price/Forward EPS: 13
Enterprise Value/EBIT: 8
Zacks Rank: 1 (Strong Buy)
Express is an apparel and accessories retailer that targets 20 to 30 year olds. It operates more than 600 stores, the vast majority of which are in the United States. The company delivered a solid 7% increase in same-store sales in the second quarter, and analysts have been revising their earnings estimates significantly higher for the stock. In fact, its earnings momentum is strong enough to place it in the top 5% of all companies that Zacks ranks, giving it a Zacks Rank of 1 (Strong Buy).
