Kurtis Hemmerling submits:

The market (as tracked by the S&P 500) has soundly retreated from the 1300 level. The high volume plunge could easily mean some more water treading until enough steam is built to make a consolidated breakthrough. Does this mean we simply sit on our hands and do nothing until then? Hardly.

First, we want to scan for some fundamentally strong growth stocks. We will pick from small firms with a close eye on fundamentals. We will pick exclusively from the S&P SmallCap 600/Citigroup Growth Index. No doubt, these stocks will fall fairly hard with the market. But watch these stocks to pick up as the market consolidates – these could be the next portfolio winners.

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Kapitall submits:

The following is a list of small cap stocks, with market caps smaller than $400M. Judging by their earnings results relative to analyst estimates, it’s clear that these stocks are being underestimated by analysts.

In other words, these companies have a track record of beating analyst estimates.

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Bert Wilkison submits:

In an industry ripe for consolidation, Avanir Pharmaceuticals (AVNR) – a small cap, debt free, NOL heavy, biopharmaceutical company with plenty of cash on hand to go along with its clean labeled, FDA approved drug for the treatment of an arguably common and debilitating condition (PBA) – certainly looks to me as though it should be considered an attractive acquisition target.

While Avanir has publicly stated that they fully intend to "go it alone" in the US market and has never demonstrated intent to put itself on the bidding block, one may still ask the question: What if the right price were to come along?

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Microcap Speculator submits:

Take a dozen microcaps, and one of them will likely to turn out to be a fraud. For Chinese microcaps, the odds are probably double. That’s why I spread my Chinese microcap stock positions over a basket of a dozen or more stocks (I trade them actively so the number tends to vary from 12-20).

• A non-existent or improperly disclosed ownership structure between the non-PRC and PRC entities that questions CGPI claim to revenues.
• CGPI may not have disclosed the actual owner of cemetery license. (CGPI VIE/operating company, Foguang, does not have ownership interest in the actual company that owns the cemetery license).
• Misrepresentation of land use rights; appears that the developed cemetery plots are situated on a much smaller area of land than CGPI claims.
• Illegal lease of land where cemetery plots have been developed.
• Fines have been levied against cemetery operation in the past; right to operate cemeteries by actual company that held the license has been revoked.
• The real potential for increased competition exits with regards to cemetery operations.
• Tourism business plan may be less attractive than portrayed by CGPI due to the development of a nearby steel/iron manufacturing plant.

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Alan Brochstein, CFA submits:

I ran a broad screen across the entire market but ended up honing in on an area that I generally feel might be neglected by investors: Small-Cap Banks. My thinking has been that Banks are only now starting to draw attention from investors – they lagged terribly in both 2009 and 2010. During Q4, the tide may have turned.

Here is the screen I ran:

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