Pick the Right Small Cap Stock
The term small-cap Stock refers to stocks with a small market capitalization, between $250 million and $2 billion. Small-cap stocks may trade on any exchange, although most are traded on the NASDAQ or on the ORCBB. The larger stock exchanges like the NY Stock Exchange have much more stringent requirements for companies to be listed, whereas the NASDAQ or the OTCBB have more lenient listing requirements.
Before acting on any small-cap stock alerts that you may have received, it is important to note that small-cap stocks are not penny stocks. There are many small-cap stocks trading for much more than $1.00 a share and with a very high liquidity ratio— much higher than many penny stocks on the market.
Yet these stocks have a reputation for being very risky and frequently associated with fraudulent brokers. Bear in mind that the size of the company should not be the only factor when considering a small cap-stock alert that you may have received.
Must larger and more prestigious companies have fallen prey to internal fraud, so with this in mind, after receiving a small-cap stock alert, get advice from a trusted financial advisor, and do your own due diligence. Weigh the positive attributes of the company against the negative hype. As time is of the essence, and financial ratios and growth rates are not as readily available for small companies as they are from those listed on the larger exchanges, many investors are not averse to getting information from small-cap stock alerts.
You can also find information by contacting the company whose stock you might consider adding to your portfolio. Check on the cash position of the company, how it has invested its money, the quality and expertise of the upper management, and whether there has ever been a bankruptcy filing or a pending lawsuit.
Another factor to consider is the present state of the economy and government policies toward business, especially small, more vulnerable ones. When it comes to the success of your personal financial portfolio, small-cap stocks can provide substantial growth opportunities. However be prepared for a roller coaster ride with exciting ups and downs.
Depending on how adverse to risk you are and how much of a loss you can comfortably afford will be deciding factors in investing in this volatile market.
Check www.killerpennystocks.com for small-cap stock alerts and information on reducing your risk factors.
For all the information you need to make winning trades in the penny stock and micro cap stock sectors sign up for small cap stock alerts at killer Penny Stocks.
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