Although some investors like to think big when it comes to investment opportunities, big ideas and big investment returns may come in small packages. This micro cap stocks or stocks issued by companies with a small market capitalizations of roughly $250 million or less can be very profitable however very risky.
Most micro cap stocks are traded over-the-counter (OTC) and their prices are quoted on the OTC Bulletin Board (OTCBB) or on the Pink Sheets. Some of the companies that list Microcap Stocks are, as a rule, new and innovative; however they have the potential to grow in ways that are not always possible for their larger counterparts even with volatility figured in the mix. Companies listing these stocks do not have to adhere to the same stringent reporting requirements as do companies that list on the larger exchanges like the NASDEQ or the NYSE, and as a result, information on these companies are not always readily available.
However a potential investor should not only begin by assessing the micro cap stocks’ current prices against their 52-week high/low trading range, but also contacting a trusted financial advisor with experience in this volatile market. Another option is by performing due diligence. Yes, finding time to do the needed research is hard work and number crunching can very time consuming and tedious work that can be a deterrent for many potential investors. However since there are few reliable reports on which you can start to construct a well-informed opinion of the company the work is all up to you. You should check valuation ratios for the micro cap stock’s performance relative to other similar stocks. The company’s prospectus and its latest financial reports is undoubtedly a good way to learn about its performance in the market place, its profit or loss and the $ amount of debt it is presently carrying and how the cash generated is being used.
Again and not too often said, it wise to first consult with a financial advisor before making any changes to your portfolio. An investment professional is privy to al lot of unpublished information about the company and its business, finances, and management.
A wise investor, knowing that this market place is full of investment scams, must research each investment opportunity thoroughly. Taking steps to ensure that your hard earned dollars bring you wanted results can make the difference between significant gains and losing your nest egg. A thorough understanding of the company's business and its products or services is not necessary but can be vital. Again a trusted financial advisor would be paramount is helping you gain information to any financial information necessary for making that investment.
Learning as much as you can about the Micro Cap Stocks, that have peaked your interest, is a worthwhile venture that would help you in future investments. You would feel more comfortable recognizing warning signals and recognizing those qualities in a company whose stock can add value to your portfolio. Sign up for online at www.killerpennystocks.com to stay informed.