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The Best Small Cap Stocks Have High Potential


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Identifying the Best Small Cap Stocks

Best Small CapThe best small cap stocks may have more potential for creating returns than any other stock available on the exchanges. They typically combine the low price that is necessary to create earnings potential along with some demonstrations of accountability and ambition that you do not see in riskier investments, such as penny stocks.

A small cap stock generally has anywhere between $200 million and $2 billion in market capitalization. That is small only in comparison to many international corporations, some of which are worth hundreds of billions of dollars. This size is a good sign. It means that the company is not issuing a shady penny stock. Instead, you get a comparatively low-priced stock that is backed by first-class fundamentals.

People like to put money into the best small cap stocks because they can earn more with one of these ventures than they can when they invest in mega cap stocks. These latter are often worth so much per share that average investors cannot buy very many. When you own few shares in a company, even a significant increase in value has little effect on your portfolio.

When you buy the best small cap stocks, you can buy many more shares. Owning 10,000 shares puts you in a good position to make some profits even from small increases in valuation. If the stock gains just 50 cents per share, you will earn $5,000.

 Some of the Best Small Cap Stocks and Their Market Capitalization

 

•             Integrated Silicon Solution – $255 million

•             Alpha and Omega Semiconductor – $188 million

•             Diamond Foods – $627 million

•             Taseko Mines – $512 million

•             Oplink Communications – $319 million

•             Encore Capital Group – $528 million

 

As you can see just from their names, these stocks span the economic sectors. They also vary significantly in size. The best small cap stocks represent a cross section of the world’s economy.

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