Today, I'd like to share with you two small-cap stocks that pay amazing forward annual dividend yields. But first, I'd like to offer you the most simplistic explanation of why the major market averages are set to move higher.
And it all revolves around the oldest and most consistent market forecasting methodology called Dow Theory.
By definition, Dow Theory says that the market is in an upward trend if either the Dow Industrials or the Dow Transports advance above a previous important high -- and this upside move is then accompanied by a similar advance in the other index.
In contrast, Dow Theory also says that a market down trend is confirmed when both the Dow Industrials and the Dow Transports averages dip below their previous important lows.
Keeping this in mind, let's look at the current status of the Dow Industrials and the Dow Transports. You'll clearly see what directional signal that the market is giving off. Starting with the Dow Industrials, you can see a slight uptrend that began in mid-March, but we certainly don't have an advance above a previous important high.
But when you move over to the Dow Transports, the story becomes quite different. As you can clearly see, the Dow Transports have most certainly advanced above an important high. In fact, this group continues to set new highs on a weekly basis -- and this fact alone confirms that the major market averages are NOT in a bear market.
Armed with this piece of information, I'd like to offer you two powerful small-cap investment ideas that could make you handsome returns in the weeks and months that follow -- and each small-cap company involves something that I call "The New Dow Transportation Index."
You see, Charles H. Dow wrote a series of Wall Street Journal editorials from 1900 until 1902 that outlined the metrics of Dow Theory. During this time (which was over 100 years ago!) the transport sector in the United States was one of the most powerful sector groups in the entire world. But now, as the global economy has become more important than ever, I believe that the "new" Dow Transportation index should be The Baltic Dry Index (BDI).
The Baltic Dry Index, also known as the "Dry Bulk Index," is a shipping and trade index created by the London-based Baltic Exchange. It measures changes in the cost to transport raw materials such as metals, grains and fossil fuels by sea. Any changes in the Baltic Dry Index offer investors like us important insight into the global supply and demand trends, and these changes have proven to be leading indicators of future economic growth.
So here's the upshot…
Given the strength of the Dow Transports, combined with my view that the Baltic Dry Index is now the superior global transport indicator, I'd like to offer you two powerful small-cap investments that will fully capitalize any continued strength in this powerful sector.
The first company is called OceanFreight (OCNF:NASDAQ). Founded in 2006 and based in Athens, Greece, OceanFreight owns a fleet of 11 vessels that engage in the marine transportation of dry-bulk and crude-oil cargoes.
The second company is called Star Bulk Carriers (SBLK:NASDAQ). Incorporated in 2006 and also headquartered in Athens, Star Bulk Carriers owns a fleet consisting of nine dry-bulk carriers which transport iron ore, coal, grain, steel, cement, and fertilizer.
As you can see from each chart, both of these small-cap shipping stocks have been recovering very nicely, and I fully expect them to pick up steam as the economy recovers. Not only that, but OCNF and SLBK both have attractive forward annual dividend yields -- 13.40% and 11.10%, respectively. This sure beats a 4% CD at a subprime-leveraged bank!
I'm currently recommending shares of OCNF and SBLK in my Bottarelli Research Small Cap letter, and I advise you to pick up some shares as well.
If you'd like to receive powerful small-cap picks like OCNF and SBLK on a weekly basis, then I invite you to join my unique Bottarelli Research Small Cap service. If you join today, your newest small-cap pick will come directly to your inbox after the close of today's trading, so take five minutes to review this special invitation!