Micro Cap Companies generally refer to public companies, mainly based in the United States, with a market capitalization ranging between $50 to $300 million. Companies with a capitalization of less than $50 million, on the other hand, are referred to as nano-cap stocks. All companies start off as small companies and gradually grow to large companies with the great market capitalization. Big companies with long track records may at times end up losing market cap due to lack of execution, innovation or even poor financial management, and hence fall into microcap category. In this article, we will focus on the top micro cap companies that you can invest in, to gain a good income.
How Micro Cap Companies Work
With an average percentage of 48% of the market in the United States, Micro cap companies generally represent a pretty big section of the market. These companies generally start off with small capitalization and gradually grow through the trade of stocks. Through hard work, integrity, as well as great capacity for risk, these are basically the companies worth investing in, as they are prone to give good returns. These companies will strive to increase their market capitalization through trading of stocks to investors. The small stocks they trade will enable them to rapidly grow.
Factors to consider when selecting Micro Cap Companies to invest in
Investing in Micro cap companies can be both a profitable idea and yet a high-risk idea, especially for long-term investors. However if you want to get the top micro cap companies to invest in and get good returns, there are a number of factors that you need to consider, which are such as;
– Fund expenses: If the expenses of the funds you are to invest in are quite high, then there is a large possibility that it may not be a very good investment to consider.
– Investment risks: There are a number of risks that are involved with this kind of investing, especially on the fluctuation of the small stock prices.
– Management team: It is very important to look at the management of the micro-cap company that you want to invest in, especially on how the companies are able to carry out strategies.
– Amount of revenues generated by the company: If a certain micro cap company is worth investing in, then it needs to be able to generate good revenues.
– Profit generation: The particular small-cap company that you would opt investing in needs to be actively generating profit.
Top Micro Cap Companies To Consider
There are a lot of companies that can be considered as micro-cap companies, but not all of them may be really worth investing in, to get a good income. However, we reviewed over a list of these companies and discovered some of the top micro cap companies are such as;
Titan Machinery Co Ltd: We considered this as one of the top micro cap companies as it has been able to record positive earnings over the last year, and even obtained a high earnings growth rate. It is based in West Fargo, North Dakota.
Donegal Group Incorporated: This is a company that deals with insurance, mainly dealing with states in the Southern and Atlantic side. It has been able to achieve great earnings with its stock, cumulating to a stock growth of up to 121.54%. It is located in Marietta, Pennsylvania.
Catabasis Pharmaceuticals Ltd: Catabasis refers to a biopharmaceutical company that deals with the development of therapeutics, used for the treatment of inflammatory, immunology and even metabolic illnesses. Over the last few years, it has symbolized a growth of 21.38%. It is based in Cambridge, MA.
Craft Brew Alliance: This organization deals with brewing, selling as well as marketing of craft beers and has also been able to have positive earnings with a growth rate of up to 37.50%. It is based in Portland, Orlando.
Why invest in top Micro Cap Companies
Micro Cap Companies are a great idea to invest in, especially if you are looking forward to creating long-term wealth. Other great reasons why you really ought to invest in top micro-cap companies are such as;
– Great performance: Micro-cap companies will often make headlines, especially when it comes to market performance over time, hence bigger profit.
– Potential for Growth: The top micro-cap companies will have a better potential for growth, as compared to the large-cap companies
– Diverse: Most micro-cap companies are diverse to investors, hence easy for them to spread risk. This can also help you as an investor to be insulated from the volatility of the market.
In as much as there are a number of reasons why you should consider investing in small-cap companies, there are also downsides that come with it, such as;
– Volatility: There is a high chance that the stocks in these companies can fall, just as how they can rise.
– High risk: When investing in micro-cap companies, there is a high risk of losing and fewer chances of success as well.
Investing in micro-cap companies is generally a profitable deal that can make you a good income, but on the other hand, it is also very risky. It is therefore very important to make considerations and know what you are dealing with before going ahead to invest. This article also details the top micro-cap companies that are most likely to give you good income when you invest in them.