What are ASX Small Caps?

Small Caps are the the smaller companies listed on the ASX by size. The size is determined by market cap.

What is Market cap?

Market cap is important because it tells you how large or small the company is. Short for market capitalisation.

The definition is simply the current share price x the number of shares on the ASX.‚Äč

Why does size matter?

Size matters because stocks in the $50 million-$600 million market cap are in the sweet spot for making money. If they are under this value, liquidity (or enough people buying and selling them) can be an issue. At the billion dollar value it is hard to grow even 5-10%. Investors get ahead with fast growth.
 

Finding gems: Can I make money at this end of the market?

There are over 2,000 companies listed on the ASX and there are some real gems in here. The trick is finding them! These companies are under researched and rarely in market news. But it's where there is money to be made on the markets. 19% or 1 in 5 of our stock picks have been taken over in the last 10 years. Why does that matter? Because the share price rockets. Join now to beat the index.

 



Are Small Caps Penny Stocks?

Small Caps are also called  Penny stocks, Growth Stocks, Emerging Companies or Micro-Caps.

Penny stocks traditionally are cheap and cost only a penny or a couple of dollars. 50% of the small caps we recommend are under $5.

Are Small Caps a good Investment?

Small Caps are a good investment because they are Australia's global success stories and as they grow, they may double, triple and more delivering you financial earnings. 

Our advice: 7-10 small caps in your portfolio

Generate excellent financial results and to beat the market with small caps. It’s this outperformance that you simply can’t achieve anywhere else or with any other financial investment.

Always consider your personal financial situation or needs.

A Small Cap Investor loves:

  • Huge price rise potential and takeovers
  • Dividends
  • Diversification
  • You can start without a lot of money

Growing your money

Growing wealth is the main objective to start investing or trading in Small Cap stocks because they can deliver you outstanding financial results in the short and long term with a limited capital outlay.

Earn income with dividends

Dividends provide income half yearly and are often paid at a much higher rate than any bank interest rate.

50% of the small cap stocks we recommend pay dividends. They prove that the business is a quality investment and it represents an important price signal for the market. 

Share price under $5

Many small caps are cheap, costing generally under $5 to buy, so you can start and build up a portfolio over time without spending a lot of money.

Achieve diversification without much money

Small Caps also provide diversification at cheap prices. Diversification means reducing your risk by not putting all your investment eggs in one basket.

How to diversify

To buy 100 CBA shares at $100 each you need $10,000. But if you invested that money into our recommendations you could invest $2,000-$2,500 in 4-5 different small caps that are positioned for growth. With your money spread across a number stocks you reduce your risk and position your portfolio for success.

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Join now. For advice on growth stocks to supercharge your investments.

 

What are some company examples of Small Cap Stocks?

These small cap companies have listed on the ASX to access capital to fund expansion. We have active coverage and research on over 100 companies. Some companies we tipped with stellar performance include:

Kogan Pty Ltd (KGN)
Medical Developments Pty Ltd (MVP)
Evolution Mining Pty Ltd (EVN)
Macquarie Telecom Pty Ltd(MAQ) 
Austal Pty Ltd (ASB) 

To get more insights, read articles and great indepth coverage for free go to our news section on our site. But to get independent advice and coverage of full company results join now.

Emerging and niche industries bringing new technology to market

Successful small cap companies in Australia come in many shapes and sizes but they are often in niche or emerging industries or are disrupting the way traditional companies do business, or are inventing new markets. For example, these three ASX energy stocks to buy are in the renewable energy sector and positioned for growth. 

Operating in a range of diverse industries

Think Australia's healthcare, energy, mining, resources, medtech, funds manager, pharma, and many other corporate activities.

Company's that make news

Even BHP that now is a major player on the world stage was at one point a start up! The point is that they don't all stay that size and investors want to be part of their huge potential.

The classic recent example being Afterpay (APT) but when they first listed you probably hadn’t heard of them. But we had! We first covered APT at $2.51! When they are still little they don’t cost much to buy and are not in the news. 

Are Small Caps riskier than large caps?

Generally they may be. But risk and return are related. There are obvious problems like liquidity - it may be harder to get stocks as there are fewer shares on the market, the cost of borrowing money can be higher and depending on the industry they operate in, they may be more prone to dip in a recession.

There are advantages as well.

They are less complex and may operate in a niche or may bring new technology or a new financial product or service to market. They can be a serious threat to large caps.

The biggest advantage for personal investors is that they are under researched. They also sit outside the big ASX group of indices (eg the ASX 200 index) which means fund managers are not able to invest in them. But there is a lot of money to be made by individuals in this space.

A key problem is that Small Caps are under researched in Australia.

How do you get insights and know which stock makes a good investment? That's where Under the Radar Report comes in our thorough coverage. We tell you what to buy and when to sell! Start for Free Now.

How do I pick a Small Cap Stock?

You choose to invest in emerging businesses to make money. Getting results is all about picking the right one!

To make money from a small cap you need to buy when it’s price and market cap are low before a big price spike so you don’t pay too much for it.

We don't always get it right but we have got it right in 7/10 small caps we recommend in the last 10 years. Our performance speaks for itself. Access a FREE TRIAL now.

It comes down to getting quality independent advice and investing in a minimum of 7-10 for diversification.

These shares are not in the news. 

You need advice to find a well run small cap with experienced management, that has a catalyst to expand or enter new markets and its financials stack up.

Read more about our services and our 7 steps to picking small caps here. Click to read more about setting personal goals for considering your objectives, financial situation or needs.





 

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