How do you invest in small capital companies?
Whats the method of analyzing companies that 10x -20x in value?
Small capital stocks are companies with a market capital of 100 million and 3-5 billion dollars.
Small capital stocks usually have a greater chance of growth then their large-cap counterparts. To double a company from 500 million to 1 billion is a lot easier then Apple Inc doubling from 1 trillion to 2 trillion.
Small capital stocks do have the risk of greater returns, but their reward makes up for the risk.
What to look at when investing:
Earnings
Bottom of the line earnings isn't the most important when
reviewing small capital companies mainly because most small companies are not profitable yet, what you should be on the lookout is the capability of becoming a net profitable company, the turn into net profitable is hugely profitable for a stock investor.
Revenue
Top of the line revenue is the most important factor in
evaluating small capital companies. The more growth in revenue the better, the higher the revenue the larger the market share, the larger the market share the bigger the company, the bigger the company turns it into a large cap.
the transformation of a small capital company into a large capital company is where big shareholder returns lie.