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Stock Strategist

Three Small-Cap Stocks for a Slugger's Portfolio

We've found a few more picks with home-run potential.

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A few months ago, we took a look at a few small-cap stock ideas for your portfolio in our article, "Bat Like Babe Ruth." We contended that swatting a few home runs in your portfolio could have a greater impact on your performance than your batting average, and we culled the universe of stocks with market capitalizations under $2 billion to find potential home-run hitting ideas.

On Feb. 28, we highlighted  James River Coal (JRCC),  Angiotech Pharmaceuticals (ANPI), and  Cheniere Energy (LNG) as three stocks that we thought had home run potential. Two of these three stocks have produced spectacular performance since then, with James River and Cheniere rising 64.6% and 21.8%, respectively, through May 9. The third stock, Angiotech, increased just 0.9% over that period. Overall, this equates to a total shareholder return of 29.1%, easily outperforming the Russell 2000 and the S&P 500, which finished up 5.6% and 8.5%, respectively.

Heather Brilliant does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.