When is the next major correction coming?

With the Dow and the S&P 500 Index just off their all-time highs, that’s the top question on investors’ minds right now.

#-ad_banner-#​Some investors are feeling anxious, remembering the last time the market reached all-time highs back in 2008, only to see the market plummet by as much as 40% in just a few months’ time. Others perceive the market to be highly overvalued, and are ready to sell and take home some of their profits.

And then there are those like myself who patiently wait for a correction and the chance to buy great stocks when they go “on sale.”

If you belong in that camp, you don’t have to wait anymore. I’ll show you the best place on the market to find deep discounts… and right now.

As most investors wait for a pullback in the S&P 500 or the Dow, there’s another well-known U.S. index that is already experiencing a correction.

While the S&P 500 and the Dow are up 3% and 1.4% over the past six months, respectively, the Russell 2000 Small Cap Index — the benchmark indicator that tracks 2,000 small-cap companies — is down 8% (as you can see in the chart below).

Why the correction among small-cap stocks?

For the answer, I’ll defer to one of StreetAuthority’s top analysts, David Sterman. David has spent years as an analyst on Wall Street working for Smith Barney and other major financial firms. If you’re not familiar with David, you should know that he has one of the keenest eyes for understanding the “big picture” of the market that I’ve ever seen.

David recently shared his thoughts on the small-cap correction in a recent article on StreetAuthority.com. As he explained:

“To be sure, the stocks that comprise the S&P 500 aren’t in crisis mode — most of them trade near their all-time highs. Yet further down the food chain, small caps and micro caps are quickly breaking down. The Russell 2000 index has begun to drift steadily lower, and many of the underlying components in that index are now 30%, 40% or more from their 52-week highs. In fact, more than 140 stocks hit 52-week lows on September 22, on each the Nasdaq and the New York Stock Exchange. That’s the largest number we’ve seen all year…

The divergence between small cap stocks and their larger peers is often explained away as a ‘flight to quality.’ When economic conditions grow concerning, investors tend to sell speculative stocks and gravitate towards the perceived safety of blue chips. This is an issue I raised a year ago, and we’re seeing the asset class rotation now: The Russell 2000 has fallen 7% in the past six months, while the S&P 500 and the Dow have risen by a commensurate amount.”

David goes on to explain that investors dropping small cap stocks for larger companies will continue in the months ahead, causing small caps to fall further. But that could open the possibility for some deep-discount buying opportunities, as long as you’re looking at the right companies:

“It is time to start slowly boosting your exposure to small caps — especially those that have sold off sharply yet represent clear value. Analysts at Goldman Sachs, in a September 23 note to clients titled ‘Small Caps: In Search of Stability Among the Volatility,’ focus on three themes: companies with strong free cash flow, companies with rising earnings estimates and companies on the cusp of a new product cycle…”

As a way to best take advantage of deep-discounts among high-quality small cap stocks, David suggests creating a “wish list” of stocks to buy that follow Goldman Sachs’ three themes.

Here’s one stock that fits the bill nicely in David’s book:

— Mazor Robotics Ltd. (Nasdaq: MZOR) is a leading-edge provider of robotic surgery equipment. This is a favorite stock of Andy Obermueller, author of StreetAuthority’s Game-Changing Stocks, and shares are down 50% from their 52-week highs as investors flee small caps.”

As David mentioned, Mazor Robotics has been on Andy’s radar since early 2013 — and for good reason.

Andy first recommended Mazor Robotics (Nasdaq: MZOR) to his readers back in February 2013, when it was still trading over-the-counter (under the ticker symbol MZRTF). The company specializes in making completely robotic surgical systems for spinal operations.

As he told readers early last year in his issue of Game-Changing Stocks:

“[Mazor] caught my eye for a couple of reasons. First, it is the only company with FDA approval for robotic spinal procedures, which means that it functionally owns the market. Second, the size of the opportunity is significant — about twice that of hip replacements, which is a $7 billion business in its own right. But there are dozens of players in that space. Here, there is only one.

Mazor’s robots use 3-D image models and then use teeny tools to work very close to the spine. This often involves repairing bones using screws. The trouble with many spinal surgeries is that there is a one-in-10 chance that the screw will be misplaced. When dealing with an area as sensitive as the spine, those are not good odds. Mazor’s Renaissance system improves accuracy by more than 70%…

Even better: to date Mazor robots have a 100% safety record. In no documented case have they caused permanent nerve damage. That is particularly impressive given that the company’s case volume has grown by more than 500% in the past four quarters alone! “

Andy’s early intuition about Mazor was spot on. The stock skyrocketed nearly 325% from the time Andy first recommended it in early 2013 to January 2014, as you can see in the chart below.

The gains have cooled off since the stock’s peak in January, but Andy’s readers are still up over 109% since he recommended it. And as I pointed out earlier, if my colleague David Sterman is right, this could be a good time to pick up this high-quality small cap company at a deep discount — a welcome and rare opportunity in today’s frothy stock market.

You can chalk up Mazor as another win to the extensive list of triple-digit winners for Andy’s Game-Changing Stocks. They join the ranks of his other recommendations like AthenaHealth, U.S. Silica and Sunpower, which returned 373%, 442% and 565%, respectively. (We told you about these companies in a previous issue of StreetAuthority Daily here).

And for those who feel like they missed out… Andy has 11 fresh investing predictions for 2015 that could deliver similar results for those who get in early. To check out Andy’s latest predictions report, visit this link.