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Good morning,
Let's talk about small cap stocks. It's common knowledge that tilting your stock portfolio toward smaller-capitalization companies will generally outperform the S&P 500 over a long enough period of time. Companies that have a market value between $300 million and $2 billion tend to outperform their large cap counterparts simply because they have a lot more room to grow and haven't saturated their markets yet.While small cap stocks provide some of the best growth opportunities in public markets, they are also much more volatile than their large cap counterparts. Many large cap companies that are name brands among retail investors (Apple, Tesla, etc.) move in unison with the total direction of the market.
It's a different situation with small cap stocks. There are clear winners and losers over the course of the year. Price performance is much more dependent on a small cap's stock performance (earnings per share) and how much interest there is in the company among retail investors. If a small cap stock has strong earnings and gains a following on sites like Seeking Alpha and MarketBeat, they can see their stock price double or triple over the course of a year. That typically doesn't happen with their large cap counterparts.
How do you find the winners though? Sure, you can buy a small cap index ETF and get average returns and you'll do fine over the course of time. But, what if there was a way to identify the best small caps to buy now without having a crystal ball? It's impossible to say with certainty what the best performing small cap stocks will be next year, but we polled the most-accurate and best-performing research analysts on Wall Street to see what they have to say.
Wall Street analysts publish more than 48,000 research notes on small cap companies each year. We've compiled a list of the 10 stocks that they are consistently issuing "buy", "strong buy", and "conviction buy" ratings on.
View the 10 Best Small Cap Stocks to Buy Now
Matthew Paulson
MarketBeat
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Small cap stocks represent companies with smaller market capitalizations and can offer high growth potential.
- Growth Prospects: Focus on small cap companies with innovative products or services and potential market disruption.
- Volatility: Be prepared for higher volatility compared to large cap stocks.
- Research Intensity: Conduct thorough research due to less coverage by analysts.
- Risk Management: Balance the portfolio with a mix of different market cap stocks to mitigate risk.
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