I’m just going put this out there immediately: Microcap stocks have the potential to be huge. I’m talking about the possibility of becoming 5x, 10x, maybe even 20x gainers in your portfolio. But here’s the thing about them… These stocks tend to remain entirely under the radar – right up until the moment they are not!
Truly, microcap stocks (that is, stocks of public companies that have a significantly smaller market cap than most, i.e. between $50 million and $300 million) are an opportunity that so many people miss out on, including even me. The reason? Often, many of today’s amazing (but smaller) technological advances are a culmination of other business-to-business technologies, created by original equipment manufacturers (OEMs). In such instances, these companies’ products are used as components for products of another company, but they aren’t exactly public-facing, with massive marketing budgets, so hardly anybody knows they exist.
I’m talking about things like microchips that become one part of an electric car, or communication software that makes images clearer, or engineering solutions that get products to market. We tend not to even realize that many small, unknown companies are actually responsible for changing the way we live.
Consider the fact that most cool technologies are created many years before they are rolled out and become popular. In many cases, several years pass with no one truly understanding how significant these small, yet mission-critical-companies play. And the entire time, these microcap stocks are available for us to invest in! But, we don’t know who or where they are. After all, these are stocks of companies you’ve never heard of. And then, by the time CNBC confirms their legitimacy, they’ve already moved 10x or more.
So, it’s up to all of us to be ‘detectives,’ if we want a piece of this action. When you find one of these companies that you like, check the shares outstanding and shares in the float; look for companies without a ton of shares available to trade. This will make for a potentially explosive play, on the mere fact the stock is not diluted!
And remember, not every investment you make into these microcap stocks is going to explode. I pick bad ones, you pick bad ones. Everybody does. But when one of them blows up in your favor, all of the other bad investments will have been worth it.