Here’s the problem: when you buy a microcap stock, the odds are pretty good that you will lose money. But how could it be otherwise? In the rare cases in which a microcap grows into a small cap, or a mid-cap, or even a large cap, investors often see the value of their investment multiplied by 10, 50, 100, or more. If it should ever be the case that such upside is available for micro-cap winners and 50% of micro-caps turn out to be winners, life—at least the part having to do with money, will be very simple indeed, as all any investor ever need do is scatter money among 10 or more microcaps.
Alas, as all but the most inexperienced and naïve investors know, the market has an automatic method of defending itself against any surefire strategy, that being that it is a free market. Any stock with a notably or demonstrably better risk/reward ratio than another simply corrects the imbalance by rising in price until the imbalance is gone.
And so, to buy many a microcap stock is, most surely, no sure bet, but that doesn’t make it a bad bet. For one thing, one always invests better—that is, with a finer sense of when to sell, double-up, or cost average down—when one invests in an industry with which one is experienced. And one invests best when one invests in one’s own industry. With that in mind, I offer today eleven microcap stocks from diverse industries. All have a market cap of less than $1 billion, and all have the virtue, if you see it as such, of having risen over the last twelve months.
As always, remember to treat these ideas as just that, ideas, and do your own research before making any investment decision.