“Since the stock market began to turn lower two months ago amid renewed fears about the European debt crisis, small-cap stocks have fared worse than their larger peers,” Reese writes. “It shouldn’t be a surprise — often when fears hit and the market falls, investors lean toward stocks of larger companies, with the assumption that they will be more stable and steady during tough times. Many quality small-caps can thus get unfairly punished during such periods, creating bargains among the market’s little guys.”
Reese says that’s what his Guru Strategies (each of which is based on the approach of a different investing great) think is happening with many smaller stocks right now. He looks at a handful of small-caps that his strategies like, including L.B. Foster Company, which gets high marks from his Benjamin Graham-inspired model. To read the full article and see all the picks, click here.