What are Microcap Stocks?
Microcaps have a market cap of $50 million to $300 million. Most traders go for the bigger companies and bigger name stocks when investing. As a result there are many micro-cap stocks that get overlooked.
Microcap stocks sell for $5 or less per share.
While you most likely will not become the next Warren Buffett by investing solely in micro-caps, you can and should add a small percentage to your portfolio. Just as you will not become filthy rich with microcaps, you will most likely not go broke either. Because of the minimal selling price there is so much less risk.
Some of the companies that exist in the micro-cap sector are relatively new, which makes researching them a bit more difficult than a company such as GE. If you do spend the time you can find some excellent stocks.
When looking for a microcap stock to invest in you should consider things such as management, what the current hot products in the industry are, and some evidence of stability.