Equity markets around the world have been smashed so far in August.
The Dow Jones Industrial Average has dropped 3.5%. The NASDAQ Composite index is down 2.6% and the S&P 500 has retreated 2.6%.
And we're only 11 days into the month!
Things haven't been looking any brighter closer to home, either.
In fact, after seven trading days, the S&P/ASX 200 Index (INDEXASX: XJO) (ASX: XJO) is yet to finish a day in the black. It has dropped 209 points or 3.7% in that time.
The nation's small-cap stocks haven't been spared either, with the S&P/ASX Small Ordinaries (INDEXASX: XSO) (ASX: XSO) down 3.1%.
While these losses might make it feel as though the world is ending, it might not be that bad. In fact, it could actually be great news for your long-term wealth.
Instead of stewing on my portfolio's falling value, I'm actively looking for bargains in the market – particularly in the smaller cap sector.
While the nation's larger stocks have driven the market higher over the last few years, the smaller companies have lagged behind – partially due to the fact their dividend yields often aren't quite as appealing.
Here are three companies in particular that have attracted me recently which I am considering buying (or topping up on) as the market falls lower…
1) Webjet Limited (ASX: WEB) is in a strong position to benefit as more and more travellers elect to organise their travel plans online. This not only includes flight plans, but also other aspects like hotel booking and car hires. After sinking as low as $2.22 recently, the stock is now trading at $2.85, which is still well below its 2013 highs of $5.30. Better yet, it offers a generous 4.7% dividend yield, fully franked!
2) Yellow Brick Road Holdings Ltd (ASX: YBR) is a wealth management group still very early in its growth days. With interest rates set to remain at 2.5% (or lower) for some time yet, demand should remain strong for the company's services. While is expected to make its maiden profit in 2015, now may be a very good time to enter a position with shares trading at just 68.5 cents.
3) Cash Converters International Ltd (ASX: CCV) isn't just a retailer of second-hand goods. It is also becoming increasingly dominant in the financial services sector, where it offers personal loans and cash advances. Not only does it offer exciting growth prospects locally (for instance, its acquisition of car finance provider Carboodle is growing nicely) but also internationally. Shares are currently trading at $1.12 and offer a 3.8% fully franked dividend yield.
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Australia's small-cap sector has largely been shunned by investors who have instead sought high-yielding, 'defensive' stocks. In fact, while the ASX 200 Index has jumped 27% in the last five years, the Small Ords has gained just 3.6%. As such, I believe some serious profits will be made over the coming years by investors who act today, and I think the companies mentioned above would be a great place to start.
