Happy New Year! Markets started 2022 the same way they ended 2021.... volatile. Weekly swings of roughly 5% continued this first week of the new year. Nasdaq ended the week down 709 points (-4.5%) while the Dow Jones dropped a mere 106 points or -0.29%. US Fed minutes signaled possible interest rate increases and high growth stocks were hardest hit. With Nasdaq the "growth" market and the Dow more of a "value" market are we seeing a rotation into value stocks? We believe so.
We also believe we are seeing a move back to home grown manufacturing as transportation and logistic/supply issues are making North American producers much more price competitive for North American customers. Industrials seem to be a bit more in favor. Many companies we speak to are seeing material and component supply shortages and rapidly higher shipping costs. The global supply chain has been dramatically disrupted. Many companies are finding new, closer to home, suppliers. This looks to be reversing the multi-year trend of cheap outsourcing, mostly from Asia. We are noticing that even some of the microcaps that we follow, like Inventronics, (IVX.V), have been able to take advantage of this trend and their last few quarters are evidence of that. We think this build local trend could have longer term impacts.
Most of the Canadian microcaps we follow had a rough 2021 share price wise. Even though many of the companies we follow had growing fundamentals, in some cases, record fundamentals, prices ended near year lows. Many were ripe for year-end tax loss selling. We've also noted an increase in insider buying and companies buying back their own shares, a comforting sign. We think that the combination of lower prices and stronger fundamentals provides a good set up for a healthier 2022. We are finding a number of microcap companies that are growing revenues at double digits and trading at single digit levels. This is a fertile market for savvy buyers and we will continue to look for well financed/profitable companies to highlight.
Smallcap Discoveries Select Portfolio
Atlas Engineered Products (TSX.V: AEP) Price - $0.61 Market Cap - $35M ImmunoPrecise Antibodies (TSX.V: IPA) Price - $7.94 Market Cap - $154M
Smallcap Discoveries Select Watchlist
Aequus Pharmaceuticals (TSX.V: AQS) Price - $0.115 Market Cap - $15M Adcore (TSX: ADCO) Price - $0.70 Market Cap - $44M - Adcore Announces New Contracts for Aggregated Estimated Annual Ad-Budget of CAD$4.9M; Almost Half Originating from North America
- Press Release https://tinyurl.com/yeznnh7d
Wishpond Technologies (TSX.V: WISH) Price - $1.31 Market Cap $68M Gatekeeper Systems (TSX.V: GSI) Price - $0.445 Market Cap - $40M | 
