The recent rise in the value of the U.S. dollar versus its peers could eventually hurt the large multinational companies, however the smaller guys may benefit.
During the third quarter the U.S. Dollar Index was up 7.7 percent, the second best quarterly gain since 1992.
As the greenback increases, it makes products produced in the U.S. more expensive for foreign buyers. On the flip side a stronger dollar could benefit the smaller U.S.-based companies that generate the majority of their sales in the country.
Approximately 77 percent of sales from the Russell 2000 companies from the U.S. versus over 50 percent outside the country for the S&P 500 stocks.
With the small-cap stocks moving into correction mode this week and greatly underperforming their larger peers it appears it is time to look at bargains within the asset class. Drilling down even further to the micro-cap stocks will only increase the exposure to U.S. sales and offer unique opportunities to investors.
One option for investors is to take a broad brush and invest in the entire asset class of micro-cap stocks via an ETF. The iShares Micro-Cap ETF (NYSE: IWC) consists of 1,384 micro cap stocks, which are characterized by companies that have a market cap between $50 million and $300 million.
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