The wider the moat, the stronger the business. It's what allows a business to earn high returns on capital over time. In investing, it refers to a business's ability to maintain its competitive advantage over its peers to protect market share and ensure sustained profits. The dictionary defines a moat as a deep, wide ditch surrounding a castle, fort, or town, typically filled with water and intended as a defence against attack. Here are some broad guidelines to pick multibagger stocks in microcap space. It's very critical to avoid unnecessary risks and speculative bets when it comes to microcaps. One must understand the company's financials, its business strategy, and future prospects before investing. It's very typical for a good microcap stock to turn a multibagger in a matter of months.įor finding such multibaggers, one needs to follow a certain process. Just like how connoisseurs can't keep their hands off chocolates, analysts can't stay away from the best microcap stocks. Very tasty and tempting yet they can be bad for health. Microcaps present a huge growth potential. Profits and revenues can fall significantly and this, in turn, can erode your wealth by 80-90%.Ī big challenge here is that large mid-cap companies have the ability to make comebacks. Owing to this, you make hefty gains on your investment.īut this speculative bet can quickly turn into a failed one in the case of microcaps. That company goes on to post extremely good results. Suppose you invest in a microcap company as a speculative bet. Also, they tend to be extremely cyclical. Microcap stocks are more risky compared to bluechip or mid-cap stocks. They may not have significant revenues or profit growth. In case of microcaps, most of the companies are new to the mix. Investing involves a certain amount of risk and when it comes to microcap stocks, the risk becomes even more. What are the features of microcap stocks? Want to discover 3 super smallcaps with the potential to soar by hundreds.and even thousands of percent over the long term? Advertisement - REVEALED: 3 Super Smallcaps You Don't Know About
#Best micro cap stocks 2012 full#
It's made up of microcap companies ranked from 501 to 750, based on of their average full market capitalisation. This index has the top 250 companies beyond the NSE Nifty 500 index. While the stocks which rank below 250 on marketcap are all considered smallcap, there is an index which distinguishes smallcaps and microcaps. What is a microcap stock?Ī microcap stock is a publicly traded company that has a market capitalisation which is lower than small, mid, and large-cap stocks. It's important for investors to understand the differences between microcaps, smallcaps, and penny stocks to estimate the possible returns on their investment and risks. On the other hand, penny stocks refer to the price of the stock.Īs of now, there are no hard guidelines for determining microcaps, smallcaps, and penny stock. Microcaps and smallcap stocks refer to the market capitalisation of a company. However, there are key distinctions which investors often forget while bifurcating.
Microcap stocks, small cap stocks and penny stocks are more or often used interchangeably. To put it differently, there is abundance of information available on such companies.īut what about the remaining stocks? Are they not investment worthy?
Out of these, the top 500 companies form approximately more than 90% of the overall market capitalisation of the BSE.Īs such, analysts, fund managers and foreign investors (FIIs) focus on stocks from this space. There are 6,000+ listed entities on the Bombay Stock Exchange (BSE).