The Success of Micro Caps
May 29 | Filed under Finance | 
Share this post
Although Microcap stock picks have vividly outperformed the S&P 500 for the past several years, many market pundits preach the virtues of big cap blue chips. However, it doesn’t hide the fact that small cap stock picks are the best investments for almost every situation.
Today’s most successful companies - Apple or Cisco, and even Wal-Mart - were penny stock picks at one time. The main trick lies in finding those micro caps, that intend to to turn into big caps - and you can make a good sum of money.
Still, the first qustion you have to answer is - what are these small cap stocks? And the answer depends on the individual you ask. Some may say that these are any stocks with a market capitalization of under $2 billion, others set the cut-off as low as $300 million to qualify as small cap stocks.
The point is that stocks are classified as big ones, medium caps, or small cap stocks. They are all divided by of their total outstanding shares value, or so-called ‘market capitalization’. For example, a stock trading at $2.60 per share with 100 million shares would have a market cap of $260 million. And another one that had a $20 share price with only two million shares would have an $60 million market cap. Even though most people would consider both of these small cap stocks, it’s for you to decide what investments do you want to gain.
Tags: