No. 2 - Size Doesn't Matter

Small Stocks Prove Once Again That Size Doesn't Matter as Russell 2000 Turns Positive For `07

Remember the Battle of Thermopylae, when 300 Spartans held off the mighty Persian army. (It’s the plot of the #1 movie “300”). Well, small stocks are a lot like those ancient Greeks, as they continue to slay their large cap adversaries. Today, the Russell 2000 climbed back into the black, while the Dow and S&P 500 floundered. The smart money is betting merger activity and a possible Fed rate cut will give smaller stocks another day in the sun. Should investors continue to bet with the small cap underdogs?

Tim Strazzini explains small cap stocks tend to do better than large caps in an up market and worse in a down market.

Eric Bolling adds that if investors aren’t bullish, they should probably stay out of the space all together.

On the small cap landscape, Tim Strazzini likes Mattson Technology (MTSN), because he thinks they’re well positioned to benefit from the next cycle in semi-equipment.

He also recommends bebe stores (BEBE) because they signed a deal with desperate Housewives star Eva Longoria, as well as Pediatrix Medical (PDX) which focuses on the health care for children.

Guy Adami likes Geron Pharmaceuticals (GERN) because they have about 300 patents and he feels they would make a good acquisition candidate.  He adds the advantage to small caps is investors can get into them for less money. But investors must do their homework, because these companies are not as closely followed by Wall Street.

In the space Jeff Macke likes Phillips Van Heusen (PVH), because the company can be bought or they can operate just fine on their own. He also likes Bon Ton Stores (BONT) as an acquisition target.

Eric Bolling likes Alon Energy (ALJ), a small cap refiner because they’re involved in West cost gasoline which he says, is the most profitable.

Questions? Comments?

Trader disclosure:
On MAR 20, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders Bolling Owns (DIS), Gold, Silver, Soybeans is Short Corn. Strazzini Owns (HAL), (YHOO), (MER), (VZ)