It looks like small cap stocks are having another incredible year.
Since mid-March 2017 lows, the Russell 2000 tacked on 5% of upside, while the S&P 500 gained just 3% -- thanks in part to an incredible broader market rally and Donald Trump’s plans to slash the corporate tax rate to just 15%.
They’ve become a barometer of Trump enthusiasm, if you will.
In fact, the more enthused the market becomes about the possibility of a tax cut, the higher small cap stocks trend. At the moment, small cap companies see a tax rate of 32%, as compared to 26% for S&P 500 companies.
That’s because they have less exposure to international tax havens. However, should Trump be successful in reducing the corporate tax rates to 15%, small cap stocks have the most to gain.
One of those stocks could very well be EnviroStar (EVI) – a stock recommended by The Cheap Investor at just $1.57 in June 2013. It hit a February 2017 high of $25 for a potential gain of 1,492%. Subscribers that followed our advice and bought at $1.57 saw a $5,000 investment soar to just under $80,000!
As usual, we spotted the opportunity others were missing.
At $1.57, most traders weren’t interested in EnviroStar, despite the fact that quarterly revenue had soared 29.4% to $6.44 million year over year. Net income had skyrocketed 713% to $125,155, or two cents a share from $15,396 year over year.
Yet, investors foolishly ignored it. We didn’t, though. And neither did our readers who watched the stock soar to a high of $25 in less than four years.
The stock is still hot. For the second quarter of 2016, EnviroStar posted revenue of $33.39 million, or $0.13 a share from $0.05 year over year. Net income was $1.329 million, up from $379,000 over the same period the previous year.
Over its six-month period, revenues were up to $42.87 million from $14.86 million. Net Income jumped to $1.68 million from $536,000. That’s incredible growth.
It proves that proper due diligence can pay off very well. A 1,492% gain is what dreams are made of.
Are you seeing similar gains, as we are in The Cheap Investor?