Christmas and (insert your favorite holiday here) come but once a year; earnings season on the other hand, comes four times a year. And while earnings season may be devoid of streamers, balloons and cake…the outcome can be just as festive for penny stock investors.
While blue chip giants are bemoaning the start of earnings season this week, those interested in penny stocks or small-cap stocks have reason to cheer…or at the very least, be extremely optimistic.
After nearly six years of strong performance, small-cap stocks headed into 2005 with many industry analysts saying the honeymoon was over. Small-cap prices were too rich they said…the Johnny-come-lately lemmings were too many…and the bargains too few.
Not surprisingly, penny stocks sailed through 2005, beating their larger counterparts by an equally large margin. For the 12 months ended May 1, 2006, the Russell 2000 index of small-cap stocks returned 31.5%, compared with 14.1% for the Standard & Poor’s 500 index of large-company stocks.
The longer view is even more impressive. Since March 2000 (the official start of this rally) the Russell 2000 index has...
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