Small caps stocks are companies with a “market cap” (the value of shares they have outstanding) below, say, $250 million, or some other arbitrary figure.
Many investors think of the “small cap group” as the place to look for aggressive investments, such as junior companies that will develop into seniors and make huge gains for investors. Some small caps will indeed turn out that way, but you’ll need to choose carefully. That’s because small cap stocks vary widely in quality.
The top small caps are well-established firms in growing fields with a least a record of rising sales. However, many small caps are start ups that have yet to make their first profit. Some succeed brilliantly, and these are the hot small cap stocks we aim to help you spot in our Stock Pickers Digest newsletter, but lots of others go broke. Then too, some small caps are former large-cap companies that have serious problems. These stocks now trade as small caps, but may be on their way to zero.
If you’re going to hold a small cap stock in your portfolio, we recommend that you only hold the very best. We also recommend using our three-part Successful Investor philosophy:
Most investors who successfully build wealth over the long term follow certain investing practices. Find out what they are in our FREE investing guide, The 10 Best Practices of Successful Investors.
ISHARES S&P/TSX SMALL CAP ETF $16 (Toronto symbol XCS; TSINetwork ETF Rating: Aggressive; Market cap: $121.1 million) invests in smaller listed Canadian companies.
The ETF holds 197 stocks, with the top 10 comprising only 13% of its assets. This gives it the appearance of a well-diversified… Read More
Smaller firms can sometimes generate higher returns than their larger counterparts, but they are often riskier, less liquid, and may underperform for long periods. One way to offset some of the risk is to focus on ETFs that hold top-quality small-capitalization companies.
Here we look… Read More
A: The Compass Growth Portfolio fund is a mutual fund that holds mostly common shares, although it does hold some bonds. The portfolio manager of the Compass funds is ATB Investment Inc. The fund’s MER is 1.94%.
The breakdown of the Compass Growth Portfolio fund is… Read More
A: On a broad level, funds that specialize in small-cap stocks are always more volatile. However, some small caps do offer above-average potential—like those we recommend in Stock Pickers Digest.
Incidentally, we think it’s a mistake to generalize about small cap stocks. Some small caps are… Read More
A: iShares S&P/TSX SmallCap Index ETF, $16.97, symbol XCS on Toronto (Shares outstanding: 8.3 million; Market cap: $140.9 million), holds the 200 stocks in the S&P/TSX SmallCap Index. That index is made up of the smaller companies on the Toronto Stock Exchange. These stocks are… Read More
Pat McKeough recently replied to an Inner Circle member looking for an opinion on Vecima Networks. The broadband equipment maker saw revenue and earnings soar in the second quarter. Still, that wasn’t without acquisitions, says Pat.
Q: Pat: Would you have any Inner Circle feedback on… Read More
Earnings for this data communications company shot up in the latest quarter on stronger sales for its high-profit-margin systems.
NORSAT INTERNATIONAL (symbol NII on Toronto; www.norsat.com) designs and makes satellite and ground equipment to transmit data, audio and video signals through commercial and military networks.
Norsat… Read More
Investments in manufacturing are now paying off for Texas Instruments as its earnings, share buybacks and dividend rise.
TEXAS INSTRUMENTS INC. (Nasdaq symbol TXN; www.ti.com) continues to benefit from its 2008 decision to quit making chips for cellular phones and focus instead on analog chips. Those… Read More
Although often volatile, you can find small cap growth stocks with strong long-term investing potential.
Small caps are companies with a “market cap” (the value of shares they have outstanding) below $250 million, or some other arbitrary figure.
Small cap growth stocks have above-average growth prospects and… Read More
A: Pinetree Capital, $0.04, symbol PNP on Toronto (Shares outstanding: 452.3 million; Market cap: $13.6 million; www.pinetreecapital.com), is an investment and merchant-banking firm that focuses on highly speculative small-cap stocks. It mainly focuses on resources, technology and biotech.
Pinetree took on a.. Read More
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