Business Blog

For the last couple of years, penny stock picks have outperformed the S&P 500. Still, many market pundits preach the virtues of big cap blue chips. Despite this fact, we can not but mention another one: micro cap stock picks are the best investments for almost every situation.

All of today’s most successful companies, like Apple, Cisco or Wal-Mart, were once small stock picks. The trick is to seek for those micro caps, which will to turn into big ones. If it happens, you will make quite a pleasant sum of money.

As always, the first qustion you may ask is ‘what are these micro cap stocks?’ The answer will depend on the person you ask. While someone may say that small caps are any stocks with a market capitalization of under $2 billion, others set the cut-off as low as $300 million to qualify as small cap stocks.

The major point is that stocks themselves are classified as big, medium, or small caps. They are divided by of their market capitalization. It means, that a stock, trading at $2.50 per share with 100 million shares, would have a market cap of $250 million. And the another one that had a $50 share price with only two million shares would have an $80 million market cap. Most people would consider both of these small cap stocks. So it’s for you to decide what investments do you want to make.