Beating the market is hard...
Over the past 10 years, just 14% of U.S. large-cap funds have outperformed the S&P 500 Index.
The two largest stock exchanges in the world – the New York Stock Exchange and the Nasdaq – see a combined 16 billion-plus shares traded each day. That represents hundreds of billions of dollars changing hands, with millions of people buying and selling stocks daily.
Folks around the world compile their insights and analyses to create consensus prices for companies. The bigger your company, the more investors research and trade your stock... and the more likely it is that your stock is fairly valued.
That makes upside hard to come by. It's hard to impress investors who already expected your latest results.
It's an efficient, time-tested system. This is why it's so hard to beat the market...
But it's not impossible.
Most analysts at major funds only focus on the biggest companies out there...
Usually, they're fixated on stocks like the ones in the S&P 500. But there are thousands of other great companies that are overlooked and undervalued.
And this is where some of the biggest inefficiencies in the market lie today.
We're approaching the best opportunity of the year to invest in these small-cap stocks... and trounce the market in the process.
It all takes place on June 26, also known as "reconstitution day." This is when the Russell 2000 Index has its biannual update.
The S&P 500 only tracks the biggest stocks in the market...
The Russell 2000, on the other hand, tracks the 2,000 best small-cap U.S. stocks. And when a company gets added to this index, it sees a wave of new purchase orders... often accompanied by a rising stock price.
You see, institutional investors need to own the stocks in the Russell 2000 to track the index's performance. So when a stock is added, it suddenly gets a ton of new buyers.
(And when a stock is removed, it has the opposite effect. Investors and fund managers sell their shares en masse in order to match the index.)
Reconstitution day also puts great, overlooked businesses in the spotlight... often for the first time. When these stocks start to get the recognition they deserve, shareholders profit.
It works best if you buy in early. That way, you can watch your position soar as the rest of the market catches up.
Just take industrial company Power Solutions International (PSIX)...
Back in 2021, it generated a paltry negative 16% Uniform return on assets ("ROA").
Over the following three years, returns climbed. They reached 24% in 2024 – double the corporate average.
This was a bad business that quickly became great. But it wasn't until last year that most professional investors started to take a closer look... after Power Solutions was added to the Russell 2000 on reconstitution day.
Shares are up more than 220% over the past year. That's more than six times better than the S&P 500's gain in the same time frame.
This isn't a one-off. Twenty-one stocks that were included in last year's update have doubled in the past year.
Reconstitution day is a huge opportunity for companies that have been overlooked for years...
But they won't stay cheap for long. And that means we have to move fast...
The upcoming reconstitution day is on June 26. But as we explained yesterday, the upside starts much earlier, on "Rank Day" – which falls on April 30 this year.
This is when the folks at FTSE Russell will rank every eligible U.S. stock by total market cap. The largest 3,000 make the Russell 3000. The smallest 2,000 of those become the Russell 2000.
At last year's reconstitution, the smallest company in the index had a market cap of $119 million. Any company trading on a major U.S. exchange... with a large enough market cap... and enough daily trading volume... is a candidate.
If you have the tools to do this ranking yourself, you can get a pretty good idea of which stocks will be added this year (barring any major market-cap surprises).
Of course, most folks outside of Wall Street don't have those tools.
That's where we come in.
We've done the work for you this reconstitution day...
We've figured out which tiny stocks are the most likely candidates to join the Russell 2000 in June.
Then, we took it a step further. We narrowed down our five favorites – the microcaps with strong, growing businesses... whose stocks should take off from here.
The companies behind these five stocks are backed by powerful tailwinds. They're all helping support major investment trends.
Best of all, investors are underestimating just how profitable they can be. And we can buy in right before they get their chance to shine. Click here for the details.
This opportunity has a strict deadline built in. We're about to hit that deadline... pushing us past "the point of no return."
It's time to prepare.
Regards,
Joel Litman
April 21, 2026
