Definition, Investment Potential, and Risks
What Is a Small-Cap Stock?
A small-cap stock is a stock from a public company whose total market value, or market capitalization, is about $250 million to $2 billion. Small-cap stock investors tend to be looking for up-and-coming young companies with significant growth potential. They’re looking for the large-cap stocks of the future.
Small-cap stocks are often overlooked due to less media and institutional coverage; however, they offer unique investment opportunities. Small-cap stocks have more room to grow than large-cap stocks. However, because they lack access to investment capital and are more volatile to market changes, small-cap stocks are riskier than large-cap stocks. Mid-cap stocks offer slightly more stability and also…
