If you are in the metals market, your eyes are certainly watching the action out of China. The more the country builds and expands, the higher its demand for anything that is pulled from the ground.

If you have been paying attention, you already know copper prices reached their highest prices since last October early yesterday. Buyers had to shell out $6,258 for a metric ton of the vital base metal.

While it is disappointing to see prices slipping today, it is no surprise. The commodities markets have often moved in lock step with the global equities market. And with mixed economic data coming from Beijing today, it is surprising prices are not down even further today.

Even with a few nuggets of less-than-expected data, China’s economy is one of the quickest expanding on the planet. Earlier today, Goldman Sachs (NYSE:GS) made the not-so-bold move of increasing its GDP expectations for the country from an annual rate of 8.5% to 9.4%.

Many investors are starting to wonder if it is time for Beijing to begin unwinding its recent stimulus measures.

No matter what the government does in the next few months, there is no debating China is at the center of the world’s commodity demand. Its desire to expand is the lifeline keeping the sector afloat.

With virtually no chance of a major disruption in its role, China is making the commodity and mining sector a fine investment.

Go ahead, make your move

While I have recommended several optimized plays for TFN Strategic Trader subscribers, I know of plenty of investors looking for a plain-vanilla sort of way to play the situation.

Anytime we need simple, the ETF market is there.

The SPDR S&P Metals and Mining (NYSE:XME) fund gives investors a pure shot at one of the most potential-filled industries on the planet. The fund includes holdings of powerhouses like Massey Energy (NYSE:MEE), United States Steel (NYSE:X) and Titanium Metals (NYSE:TIE).

Between those three companies alone, investors get a shot at a recovery global economy.

Of course, ETFs are great investments for the set-it-and-forget-it investing crowd. But they are not for everybody. With diversification comes lowered risk and lowered reward.

And anytime you are paying somebody else to do your buying and selling, it will come with a cost. In this case, SPDR charges 0.35% of your position, a fairly low fee in a high-priced industry.

But if you have been watching the commodities sector on the sidelines, eager to make a move, and are unsure how to do it, I think you just found your answer.

ETFs are a great way to enter the investing world on a low-cost, low-risk basis.

Source: Use the ETF Market to ‘Mine’ Commodity Profits

But how do you uncover and identify the very best small cap companies?

Well, the trick is to identify specific market niches that are in the very early stages of growth – and invest in the companies (if any) that are positioned to exponentially grow sales, revenues, and profits when these market sectors take flight.

In this spirit, here are three of the top market niches that I’ve recently identified – and the corresponding small cap stock charts that fit into each powerful category.

Market Niche: Bullish on Titanium

I find it amazing that we’re in the heart of a commodity boom – not one in a hundred commodity investors realizes that titanium (not steel) will soon be viewed as “The Metal of the 21st Century.” In fact, while steel stocks are blasting higher across the board, one small cap titanium stock (listed below) could be one of the best investing opportunity you see all year.

Here’s the situation…

Discovered in 1791 and named after Titans of Greek mythology, titanium is a light, strong, and corrosion-resistant metal with a grayish color. The two most useful properties of titanium are the fact that it’s resistant to corrosion and that it has the highest strength-to-weight ratio of any metal.

In its unalloyed condition, for example, titanium is as strong as steel but 45% lighter.

As you can imagine, this unique combination of strength, light weight, and corrosion resistance makes titanium useful in hundreds of applications. For example, it can be alloyed with iron, aluminum, vanadium, or molybdenum to produce alloys for jet engines, missiles, spacecrafts, petro-chemicals, or desalination plants.

If you’ve bought a new golf club in the last 12 months, odds are the overweight head on your driver is made of titanium.

And here’s the thing. When you consider the cost benefits of titanium on lifetime basis, the market is quickly discovering that no other metal is as reliable or as economical as titanium.

It’s categorized into the “Nonferrous Metals” group, which is defined as a metal (other than iron) such as copper, lead, zinc, nickel, and aluminum – and this is one of the specific sector niches that I’m bullish on right now.

The top small cap company that’ll capitalize off this titanium bullishness is Titanium Metals (TIE – NYSE). And in fact, TIE just might be the most undervalued stock on the S&P 500.

After all, if you run a screen of stocks on the S&P 500 that are down over 30% in the past three months and that also carry double digit earnings growth forecasts for the next fiscal year, the one company with the most attractive readings is TIE!

Their 3-month percent change is -42.5%, yet their Earnings Per Share growth rate currently stands at 35.3%. No other stock, which has fallen over 31%, has earnings per share growth this high. Not even Google (GOOG – Nasdaq)!

Therefore, you can realistically argue that TIE is the most under-valued stock on the S&P 500 right now. No other company with an EPS growth rate of 35% has fallen so far, and the best part is, most investors don’t realize this fact.

I’m currently recommending shares of TIE in my Bottarelli Research Small Cap letter, and I advise you to pick up some shares as well.

Sincerely,
Bryan Bottarelli
Editor, Bottarelli Research Small Cap

P.S. If you’d like more information on Bottarelli Research Small Cap, we invite you to review the letter below: