Charles’ Note: This may come as a shock, but there are more than seven technology companies out there. I promise!
Of course, you wouldn’t know that from reading the financial press. The Magnificent 7 stocks are the only ones that seem to get any love.
That’s changing though. Quietly, behind the scenes, smaller and mid-sized companies have taken over market leadership. And this trend is only getting started.
I’ve been writing all month that the biggest winners from the AI revolution probably won’t be the mega-cap tech stocks plowing tens of billions of dollars into AI research and development. It will be small, under-the-radar companies that no one has heard of who take what the Magnificent 7 have built and find entirely new ways to monetize it.
Want to catch one of those potential winners? Then read on and see what our Freeport Society friend and tech investing expert Luke Lango has to say.
The Magnificent 7 – Alphabet , Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla – have led the market for the past couple of years.
They’ve outperformed the “average” stock by wide margins.
From early 2023 to summer 2024, the Magnificent 7 soared about 150%. The Russell 2000 – an index of 2,000 small-cap stocks – rose a meager 17%.
That puts the Magnificent 7 stocks’ performance 9-to-1 better than small-cap.
But something big has changed since summer 2024.
Small-cap stocks are now crushing their Big Tech competitors.
The Magnificent 7 stocks peaked on July 10, 2024 and then proceeded to trade sideways until after the election..
Meanwhile, the Russell 2000 has been charging higher and was recently up 20% from its July 9 closing value.
That is, for the first time since this bull market began in late 2022, small-cap stocks are consistently outperforming Big Tech’s previous incumbents.
That’s a big deal.
Throughout 2023 and most of 2024, the U.S. economy was propped up by robust AI spending, mostly via Big Tech firms. Those titans were pouring billions upon billions of dollars into developing new AI data centers, chips, chatbots, and more.
Of course, all that spending benefitted those Big Tech firms and companies related to them. But it didn’t do much to help everyone else.
Now, though, the U.S. economy is expected to strengthen beyond AI in 2025. Thanks to pro-growth policies, rate cuts, and lower inflation, plenty of market observers – including us – think that the economy will improve in 2025 in a way that benefits companies beyond the scope of AI.
Call it a small-cap comeback…
A U.S. economic revival…
The return of mom-and-pop shops.
The result is that small-cap stocks are soaring.
For the first time in years, the stock market is becoming a “market of the many.”
However, buy-and-hold investing is no longer the holy grail it once was.
It’s becoming harder and harder to pick the right stock for the long haul.
To succeed in today’s market, you have to alter your trading strategy.
Luke Lango just released powerful new research which can help you get into the best stocks throughout 2025. This strategy has already helped his readers make 115% in under 60 days. And he’s about to launch a brand-new model portfolio but you must act now before the price goes up.
Auspex is a comprehensive stock screening tool designed to identify the “best stocks at the best time” using a combination of fundamental, technical, and sentiment factors.
Fundamentally, Auspex is not that different from InvestorPlace colleague Louis Navellier’s Stock Grader. In this sense, Auspex focuses on strong and positive sales and profit growth, as well as evaluates profit-margin expansion.
Technically, Auspex resembles my Breakout Trader system and momentum-following strategy. It examines positive slopes in moving averages and assesses favorable price-action.
On a sentiment basis, Auspex is comparable to money flow systems like the MoneyFlow Indicator that Chief Investment Strategist Charles Sizemore’s uses at Freeport Alpha. It monitors increasing trading volume and tracks money flowing into stocks.
In short, Auspex effectively combines the best characteristics from various in-house trading systems into one powerful tool.
Most importantly, it can get you in and out of the best stocks to buy in any given month.
No more buy-and-hold investing…
No more guesswork…
And no more underperforming the market.
From 10,000 to 20
Each month end, Auspex scans over 10,000 stocks. It applies strict criteria to identify fundamentally, technically, and sentimentally strong stocks.
This process typically yields 5-20 stocks for the monthly portfolio. You simply sell the previous month’s stocks and buy the new month’s selections.
Live performance over the past five months (July to November) has consistently delivered positive and strong returns for subscribers. And, due to rigorous backtesting, we’ve seen Auspex outperform the market by approximately 10X or more in 5-, 10-, 15-, and 20-year windows.
Look no further than our March backtest, in which Auspex identified Forestar Group as potentially one of the best stocks in the market at that time.
Throughout the month of March, FOR stock rose almost 20%, while the S&P rose just 3% in the same month.
In the February backtest scan, Auspex identified ICON Public and Couchbase as two of the potentially best stocks in the market at that time.
Throughout February, the former rose more than 20%, while the latter rose almost 15%. The S&P, on the other hand, rose just 3.5% over that same stretch.
Then, in the December 2023 backtest, Auspex identified Oppfi and Talkspace as potentially two of the best stocks to buy in the market at that time.
Oppfi rose about 45% in December. Talkspace rose about 25%. The S&P, meanwhile, rose just 4% in December 2023.
By combining fundamental, technical, and sentiment analysis, Auspex has consistently demonstrated its ability to identify breakout stocks before their explosive growth phases.
It’s a powerful edge in navigating the complexities of today’s dynamic stock market.
The Final Word
As we move beyond the era of simple buy-and-hold strategies and the dominance of Big Tech, Auspex stands ready to guide investors toward the next generation of market winners, month in and month out.
In a world where adaptability and precision are key, Auspex represents the future of intelligent stock selection.
But better still, it requires only five to 10 minutes of attention per month.
I’m releasing a brand-new list of stocks that our Auspex tool flagged as “Buys” on January 2.
