Top 5 stocks for your investment portfolio – Small Cap edition

The stock market has rebounded as the DJIA has risen from a low in the beginning of March when it was teetering just below 6500 points. We’ve gained back nearly 3000 points in less than six months. However, some companies have still been struggling, while others are prospering and booming. Below, we’ll take a look at 5 companies with a market capitalization of at least 100 million, but below 1.5 billion (small cap stocks), and who were the best stocks year to date:

1. Kirkland’s (KIRK): This small cap specialty retail home decor store chain has seen their stock price shoot up nearly 500% over the past year. Watch out though, recent earnings reports indicate this stock may have hit it’s peak. If people are going to be stuck in their house, it seems logical they want to look at nice things.

2. China Green Agriculture, Inc (CGA): Everyone knows organics are trendy, so how couldn’t we have seen organic fertilizers as being a smart business; especially considering the heart of their business is China, with a country population of 1.4 billion people. A recent pull back in price makes this 335% gainer an attractive buy once again. Keep in mind though, organic consumption is dropping while consumers cut back on everything possible. This small cap stock is worth looking into further.

3. STEC, Inc. (STEC) has seen their stock price triple over this year, and they don’t look like a simple flash and dash. Flash drives is their core business, and their technologies are gaining them a competitive advantage. Their stock price is up over 200% and with a market cap around two billion, these guys will be around for a while.But remember folks, buy low and sell high. They just might be at their peak.

4. Isramco, Inc. (ISRL) is a natural gas exploring, crude oil pumping money maker. Their small cap company has seen their stock double in these tough times. Watch out though, rumors on the block are these guys are being investigated for securities fraud.

5. American Dairy, Inc. (ADY) operates in China offering unique dairy products to fulfill special dietary needs of a massively diverse population. These guys have been around the block for over 5 years and hit a wall earlier this year, however, they have since seen a steady increase in their share prices over the last month or so. Their recent earnings release was mixed, but all indicators point to this stock showing promise.


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401(k) Plans For Employees And Employers.


The responsibility for keeping money rolling into households in retirement is shared between individual employees and their employers. A 401(k) fund can be the best choice for an employer plan while a self-directed 401(k) can maximize the control exercised by individuals.

The 401(k) employer plan differs from the traditional fixed monthly payment plan in that it has preset contribution levels. This means that employees are required to invest their salaries and to be actively involved in guiding and adjusting those investments. 401(k) funds are now the dominant employer plan in the public sector. They are classified, by the IRS, as ‘profit-sharing’. However they do not necessarily involve true profit sharing.

Other types of retirement provision are available to employers such as the 403(b) for employees in educational and not for profit organizations, or Employee Stock Ownership Plans and profit-sharing ones.

401(k) funds offer tax deductions and flexibility in both the way the plan is set up and in the investments that individuals decide to make. 401(k) self-directed funds differ from the traditional a pension plan in that workers keep the benefits when they change employer. They are also insured against the bankruptcy of the contributing employer.

The choice of 401(k) fund structure is the first and most fundamental decision to be made when an employer establishes a fund. There are three distinct types of 401(k) plans:

  • A ‘Simple’ 401(k) fund is the best option for small to medium sized companies with fewer employees who received a minimum of $5,000 in pay in the previous year. Employees can only draw contributions or benefits accruals from this plan from the one employer. These kinds of 401(k) fund are not subject to nondiscrimination reviews that aim to ensure fairness of benefits between workers, owners and managers.
  • ‘Traditional’ 401(k) funds is where employers can make matching contributions to employees’ deferrals. Companies can apply a ‘vesting schedule’ that sets minimum service periods before a getting the matched contributions. Employees who join the fund make deductions direct from their salary. Each year reviews are done to ensure that workers get proportional benefits in line with owners and managers.
  • A ‘Safe Harbor’ 401(k) fund is like a traditional plan, but the tax rules are much simpler and the employer contributions have to be fully vested from the start. Not subject to annual nondiscrimination testing

The justification for establishing and joining employer/employee retirement funds is a lot about the time when tax is paid. In most 401(k) funds, employees put a proportion of their salary in to the plan before income taxes are deducted. The capital growth and interest on the funds is also not subject to tax deductions. Only when the retirees make withdrawals are they subject to tax.


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