Of course, the “cap” refers to the market cap of the company. But there are actually definitions and a difference between microcaps and small caps. Some people mix up microcap and small cap stocks. If you’re careful, though, you can get through it. Because it can make you a lot of money in a short amount of time.īut it can also take your investment.
Of course, this is the big draw to penny stocks. And they can do this much faster than other stocks. Penny stocks are volatile, and could go either way. They are usually at or below $5 per share. It carries less, but that’s still something to keep in mind.Īnd many times, microcap stocks are, indeed, penny stocks. Even if it has a long, slow-growing history, it still carries some risk. So, you don’t know how well they will do in the future. They don’t have a lot of history to back them up. So, when considering that, it comes down to the business model. If a business cannot differentiate itself enough to turn a profit, it may not be the best company to invest in.
It’ll come from a slow-growing, steady industry. Sometimes a high growth microcap stock will pop up out of nowhere. Like healthcare, biotech, technology or energy. Some of the best microcap stocks are in other, well-established industries. And that’s especially true when those small companies lie in speculative markets.īut that’s not always true. The potential with such young companies is enormous. Microcap stocks, like penny stocks, usually hold huge gains to be had.
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