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Two Stocks for Capital Gains Hunters

Tickers in this article: ARR PSEC
NEW YORK ( TheStreet) -- I'm not just referring to gold or silver mining companies when I say I'm "prospecting" for overlooked gems in today's stock markets.

All that glitters isn't gold, and here are a couple of companies with the prospect for exceptional total returns.

On a recent fishing expedition through the oceans of investment opportunities I came across two companies I'd forgotten. One of them I'd owned in the past. Because I waited until the price of the stock came down to my buy-limit price, I experienced an excellent total return outcome.

For those who don't know what a "total return outcome" is, allow me to explain. If I can find a publicly traded company that is profitable and gushes geysers of cash profits, I begin there. If that company also happens to pay a generous dividend to shareholders I get even more interested.

If I purchase the shares at a reasonable price and I'm able to hold the stock for 12 months or longer, I'm going to anticipate that when I sell that stock for a capital gain I will also have collected most of the annual dividends. The amount of those dividends plus the amount of the capital gains are my "total return outcome."

One way I accomplish this is by utilizing two important disciplines: position sizing and a carefully chosen trailing stop alert system that lets me know (via an email or text message alert) when the stock I own has moved a given percentage below or above the price for which I purchased it.

It's called a "trailing stop" because it follows the movement of the stock price and alerts me when that price has moved a predetermined percentage below my entry price or the highest price that the stock has climbed since buying it.

For more details on trailing stop alerts click here.

Let me introduce you to one of the examples of a stock that a total return investment prospector like me would be attracted to.

Prospect Capital (PSEC) is a business development company. It is a private equity firm specializing in late-venture, middle-market, mature, mezzanine finance, buyouts, recapitalizations, growth capital, development, cash flow term loans, and bridge transactions.

PSEC makes secured loans, creating senior debt, first-lien and second lien loans, mezzanine debt and equity investments in private and microcap public businesses. One of its most attractive qualities from an investors' perspective is that it typically invests across all industry sectors, with a particular expertise in the energy and industrial sectors.

More specifically, PSEC invests in oil and gas production, coal production, materials, industrials, consumer discretionary, information technology, utilities, pipeline, storage, power generation and distribution, renewable and clean energy, oilfield services, health care, food and beverage, education, business services and other select sectors. It spreads the risk to a plethora of valuable sectors.