On most occasions, our microcap company standard of 50 million or less shares outstanding is and will always be unwavering. Now, you’re probably saying, ”it’s not the number of  outstanding shares that matters, it’s the value per share of certain statistics like earnings per share and valuation ratios like price to earnings and price of sales multiples that matters when determining if a stock is undervalued.”

While this may be technically true, think about it this way – A company that has a lot of outstanding shares may be giving you a clue that multiple offerings came about because the company was unable to use the money it’s been raising to grow cash flow, potentially raising red flags on the effectiveness of management.