Common Strategies for Investing in Microcap Stocks

When investors think of diversification, they might think of balanced mutual funds with a mix of bonds and equities, maintaining cash in a money market account, investing in individual corporate and government-issued bonds, and having a portion of their portfolio devoted to Blue Chip stocks with dividends and minimal risk. 

However, often-overlooked microcap stocks offer substantial growth potential and fall within a market niche that few investors take advantage of. Microcap stocks are usually defined as stocks with market capitalizations of $50 to $300 million. 

However, some investors will consider stocks with market capitalizations of up to $500 million to be microcap stocks. Stocks below a $50 million market capitalization are referred to as nano cap stocks.

Think of microcap stocks as potentially being the next Apple, Netflix, or Walmart. Actually, Walmart and Netflix were both once microcaps. These under-the-radar companies don’t grab national headlines until they become the next big thing. They aren’t widely covered in the news, and often aren’t discussed by the financial media like CNBC or investment analysts. They simply represent a portion of the equities market that many investors choose to ignore, are unaware of, or don’t bother to research. That’s where GeoInvesting comes in.

GeoInvesting is an investing research firm with a 16-year history of success, helping investors identify, research, analyze, and invest in solid microcap stocks that offer substantial long-term return on investment (ROI). We help investors identify microcap stocks with solid financials while providing invaluable insight into the company’s management, culture, decision-making process, and product or service offering.

While there can be more risk with microcap stocks, the near real-time data, analytics, insights, and research provided by GeoInvesting help microcap investors make better, more informed investing decisions.

How To Research Microcap Stocks

How do you research microcap stocks when they never get the same level of attention as Blue Chip or S&P 500 companies and equities? Granted, it’s a great question, but it’s also your investing edge. Furthermore, it’s not as difficult as it may seem. Knowing what to look for ultimately comes down to identifying certain market, industry, and company-specific trends. 

Here are some things to consider.

Technology / Market Shifts

Market shifts or technology disruptions are everywhere. When they occur, they coincide with a sudden increase in customer/consumer demand. Think about how VHS was the dominant medium before DVDs took over, which were then replaced by Blue Ray until – quite recently – streaming overcame them all. In each instance, a new solution was proposed that improved the customer experience and reduced costs…no different than when Netflix replaced Blockbuster Video as the new norm to watch movies in the comfort of your own home.

While market shifts may be easier to spot in consumer markets, GeoInvesting provides evidence of these disruptions within industrial and commercial markets. Our analytics, data, CEO interviews, and research insights provide much-needed intelligence for identifying those next great microcap stocks. For example, right now, we are looking for companies that are finding ways to benefit from the explosion in Artificial Intelligence (AI), partly as a result of technology being developed by Nvidia. 

However, when investing in popular trends, you need to be careful that you’re not being duped into investing in hype. That’s why our strategy to search for AI stocks only seeks out legitimate companies in the space, because most will be all fluff. Our track record of protecting investors from investing in frauds and pump and dumps better positions us over our competitors to identify quality companies. But, more on that later. 

Maybe, you don’t like investing in hot trends.

That’s why you might be interested in knowing that another area that we have been successful investing in since 2016 has been in “boring” companies benefiting from rebuilding the decaying United States infrastructure, such as roads, bridges and buildings. And it’s events like the Baltimore Key Bridge Collaps earlier this year 

that continue to put these infrastructure rebuild companies in focus. 

We make it easy for our premium subscribers to follow the stocks we like in these special industries by creating stock screens (lists) that we publish on our premium portal, accompanied by related research reports and notes prepared by Geoinvesting analysts.

By the way, a good rule of thumb to find promising smaller companies is to identify suppliers whose products  would be seen as an essential part of the supply chain. In our DVD analogy, manufacturers needed plastic, lacquers, bonding, and specialized inks. The companies that provide these consumables to larger companies can achieve substantial growth.

Understand the Market’s Potential

Some of the best microcaps are operating in less-than-exciting industries that often fly under the radar but have significant growth potential. Understanding smaller markets and identifying new growth trends is incredibly important to gain a competitive advantage – just as important as identifying market disruptions. Even microcap stocks of companies with small market shares could be winners if the potential expansive size of the market offers incredible growth potential.

Leverage the Data and Insight from GeoInvesting

Not only does GeoInvesting provide the tools and insights to identify new market disruptors and boring companies with new exciting potential, but our tools and insights allow you to invest in unknown microcap stocks long before large financial institutions start to take notice. Year-over-year (YOY) quarterly earnings per share (EPS) and revenue growth tables, along with multiple other analytics are readily available through GeoInvesting.

Amplify your understanding of these insights through our free GeoWire monthly newsletter with weekly and monthly wrap-ups, case studies, stock pitch lobby, and investor insights. For GeoInvesting, it’s all about our premium research with its in-depth analysis and unmatched insight into the top companies within the microcap stock space. You can learn about our premium packages by clicking here, which includes annual and monthly subscription options and a FREE trial.

Risks of Microcap Investing

There are many risks associated with microcap stock investing. A great way to mitigate these risks is to understand factors that either make a business plan too risky to invest in or that reveal red flags indicating a company is a fraud or where management will engage in illegal market manipulation. 

Knowledge is power! Avoid making an uninformed decision when you look to GeoInvesting for assistance. We spent a good deal of our career exposing fraud and working with regulators,  which has helped us deliver an outstanding track record to our premium subscribers, including delivering over 200 multibaggers.

Begin Your Microcap Investing journey today!

We always put our best efforts into finding micro stocks to invest in. We want all of our members to be successful and truly learn the fundamentals of how to invest in microcap stocks.

If you’re interested in micro cap stocks with dividends or learning more about micro cap value investing, get in touch with our experts at GeoInvesting. We provide the best research and resources for micro cap value investing. Find out why we’re considered one of the top microcap cornerstone stock investing firm around and get in touch with our team today!