There’s an old adage in finance that goes, “sell in May and go away,” and it’s not without good reason. According to the Stock Trader’s Almanac, the Dow Jones Industrial Average has returned -1.1% on average from May to October since 1950 compared to an average 8.4% return from November to April.

#-ad_banner-#Selling all your holdings every summer isn’t always reasonable, though, due to transactions costs and various tax penalties. Instead, we here at StreetAuthority decided to focus on a different strategy.

Small-Cap Companies: A Proven Approach To Beating The Market

Rather than investing in a lagging market over the summer, we wanted to find small stocks primed to outperform in the long-term.

It’s a pretty simple concept — just like people, companies have the most room to grow when they are still small.

Historically, small-cap companies (firms with a market value of less than $2 billion), have significantly outperformed their larger peers in the S&P 500. The chart below shows the performance of a small-cap ETF compared to the S&P 500 since 2000.  

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Guided by this principle, we started a series called Project Alpha. On Wall Street, alpha is a term to describe high returns on a risk-adjusted basis. Our goal with this series was to consistently pick stocks which would deliver a positive alpha, meaning they beat the market without excess risk.

From our first pick in late March of 2015 until today, the S&P 500 has returned a loss of 0.8%. In the meantime, our Project Alpha portfolio has returned 11.8%. That’s a pretty good spread — most analysts fail to outperform the market by more than a few points. We beat it by double-digits.

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If you don’t remember Project Alpha, don’t worry. The content was reserved for premium subscribers last year. But starting today, we are opening our research to all our readers, not just paid members.

Here’s a look at picks from last year and how they’ve performed since:

As you can see, five of our seven picks boast positive returns, three of which have posted double-digit gains.

While the time has passed to get in on some of those investments, we are excited to be bringing you a new series of picks this summer for Project Alpha. Our first new pick will be available tomorrow on streetauthority.com, but here’s a sneak peek:

“We’ve found the needle in the haystack: a small cap company with cutting-edge technology poised to break into mass market adoption.

Dubbed the “next major inflection in semiconductor packaging,” this firm is involved in just about every tech buzzword you can think of. Drones? They use the company’s state-of-the-art image stabilization technology. Biometric detection? The newest iPhone and Samsung Galaxy S7 fingerprint sensors both use the firm’s Direct Bond Interconnect (DBI) platform. Internet of Things? This company’s got the lowest cost, ultra-high performance semiconductor packaging on the market. Smart cars? 360 sensors and driver monitoring could be direct applications of the firm’s imaging solutions.”

Click here for the full pick. 

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