{"id":103518,"date":"2017-03-16T11:03:24","date_gmt":"2017-03-16T15:03:24","guid":{"rendered":"http:\/\/countingpips.com\/?p=103518"},"modified":"2017-03-16T07:03:49","modified_gmt":"2017-03-16T11:03:49","slug":"fed-rate-rise-spawns-new-opportunity-in-small-caps","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2017\/03\/fed-rate-rise-spawns-new-opportunity-in-small-caps\/","title":{"rendered":"Fed Rate Rise Spawns New Opportunity in Small-Caps"},"content":{"rendered":"
March 16, 2017<\/div>
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By WallStreetDaily.com<\/u><\/a> \"Fed<\/p>\n

\"LouisYesterday the Fed decided to boost interest rates by 25 basis points \u2013 raising the range of the federal funds rate to 0.75%-1.00%.<\/p>\n

And stocks responded favorably \u2013 with the Dow increasing 108 points by the time the market closed.<\/p>\n

Now, history shows that the rally might be short lived.<\/p>\n

While it\u2019s normal for stocks to steadily march higher during the first few days following a rate hike, the market tends to cool off by day seven.<\/p>\n

Not to worry, though.<\/p>

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Even if the momentum slows, that doesn\u2019t mean there\u2019s not money to be made right now.<\/p>\n

As senior analyst Jonathan Rodriguez pointed out last week<\/strong><\/a>, small caps \u2014 particularly value names \u2014 are among the best performing stocks when rates rise.<\/p>\n

As you\u2019ll recall, he noted that small caps \u2014 particularly value names \u2014 are among the best performing stocks when rates rise.<\/p>\n

Today, he reveals one of the market\u2019s most undervalued small-cap gems\u2026<\/p>\n

Ahead of the tape,<\/p>\n

Louis Basenese
\nInvestment Director, Wall Street Daily<\/em><\/p>\n

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Radio Might Be Down\u2026 But It\u2019s Not Out<\/h2>\n

\"JonathanTerrestrial radio is one of the most powerful media platforms in the world.<\/p>\n

Radio reaches 5 billion people worldwide \u2014 70% of the population, according to the United Nations.<\/p>\n

Here in the United States, 93% of Americans aged 12 or older listen to the radio at least once a week, according to Nielsen Audio. That\u2019s better engagement than TV (85%) or smartphones (74%).<\/p>\n

No doubt, the business of radio \u2014 driven mainly by advertising revenue \u2014 has declined as marketers shift resources to digital ad space.<\/p>\n

But terrestrial radio is still an $18 billion industry, with many broadcasters now successfully making the move from AM\/FM to internet radio \u2014 a lucrative, rapidly growing market.<\/p>\n

And one such company is currently making waves\u2026<\/p>\n

A Shining Star of Value<\/h2>\n

Salem Media Group Inc. (SALM) is one of the nation\u2019s most prominent Christian faith-based broadcasting companies.<\/p>\n

Salem owns and operates 118 radio stations in 40 markets around the country.<\/p>\n

It also delivers programming to more than 2,800 affiliate stations nationwide.<\/p>\n

And despite the firm\u2019s considerable reach in the radio industry, the company sports a market cap of just $193.7 million.<\/p>\n

Over the last five years, Salem has driven earnings growth of 18.9% \u2014 more than two times the industry average. And the company projects a whopping 47% increase in annual earnings per share in fiscal 2018.<\/p>\n

Revenue growth has lagged the industry a bit, but the company has expanded its digital media and publishing segments \u2014 which have helped make up for the slowdown in broadcasting sales.<\/p>\n

In fact, the digital media division has grown by 68%, to $45 million, in the last five years. It now comprises 17% of total sales. And the publishing segment has nearly doubled sales in the last three years.<\/p>\n

Since 2012, the company has also increased operating income by 36.1% through deep cost cuts in the face of revenue declines.<\/p>\n

Better still, Salem carries just $274.8 million in debt \u2014 a third of the industry average.<\/p>\n

Priced at a Steal\u2026 but Not for Long<\/h2>\n

We already know that Salem\u2019s balance sheet looks great. But it gets better\u2026<\/p>\n

Its valuation metrics reveal that the stock is trading at a steep discount right now. Consider:<\/p>\n