Can you tell me more about small caps investing?

MNSL answered 3 months ago …

Even now, you can find outstanding small stocks through out the world. Some small companies can become great companies in the future. Sometimes you can make above average profits from small stocks than blue chip and medium size stocks.

Some investors have specialized in small stock sector and if you can do some research; you will find how some top shareholders make money in small stocks.
I
n today’s market, we do not see any significant upside for so-called blue chip stocks and growth stocks Prices of some stocks have come down more than 65% in some countries.

On the other hand, some small stocks are doing well through out the world now. I think this is the best time to invest in undervalued small stocks with great potential in the future through out the world. You can look for some neglected sectors and hidden gems as well.

You can also look for future earning changes This is very important. Their will be dramatic changes in earnings in some sectors and companies not only in the USA BUT also worldwide. Sometimes one or two quarter profit will come down due to inflation and other negative factors. These are temporary and in the fourth quarter and in the next financial year these small companies will make above average profits and thereafter will see rapid growth. You can identify this type of small companies almost all the sectors.

Some of these stocks have following characteristics:

Higher earnings
Lower P/E
Return on equity more than 20%
Prospects for growth in the next 05 to 10 years
Higher profit in the future
Consolidation in the market
Demand for their products in the future
Only few brokers are following
Intelligent investors are gradually accumulating

Please see following link:

http://www.investopedia.com/terms/s/small-cap.asp