Investors tend to put their money to work in companies they are familiar with. This is understandable, but in order to get a fully diversified portfolio, you have to be willing to move out of your comfort zone, and look for stocks that you may not be familiar with.
Small and mid-cap stocks can often get overlooked simply because they do not garner the same level of analyst coverage and media attention. Unlike household names like Wal-Mart (WMT) or Apple (AAPL), small and mid cap stocks are often companies that you have never heard of.
Mid-cap stocks, those with market caps between $1 billion and $10 billion, are very attractive in my opinion. While some investors see risk in smaller stocks, I see opportunity.
The biggest advantage to investing in smaller companies is that they are often more nimble and able to adapt to changing economic conditions quicker than large-cap stocks. Smaller companies have less bureaucracy, allowing management to maker quicker business decisions and adjustments.
These companies often fly under the radar, but offer significant growth opportunities.
When looking at small and mid-cap stocks, you have to do the same homework you do for large-cap stocks. You need to make sure that the companies are growing, have attractive valuations, and have solid underlying businesses.
Let’s take a look at five companies you may have overlooked that appear attractive at the current time.