Companies whose market capitalization is between $250 million to $3 billion are known as small cap stocks. For investors looking for companies generating growth in sales and profits, they go to small cap stocks. These companies are not as established as blue chip corporations and tend to have much more room to expand. A small cap stock company with $150 million in annual sales will be much more nimble than a corporation with $5 billion in annual revenue.
To be profitable as a small cap stocks investor, proper research must be done in order to find the companies with the best potential for share price appreciation. Most of these corporations have ambitious executives, a plan to become a dominant player within their industry, high revenue growth and expanding profits.
Investing in small cap stocks can be chancy but highly rewarding.