CHOOSING THE RIGHT
SMALL CAP SHARES
Small Cap Shares will boost your investment returns. It's much easier for a small company to double or triple in size than for a top 10 company to grow by 5 or 10%. You need to invest in 7-10 ASX listed Small Cap Shares to position your portfolio for growth. Under the Radar provides the stock research to help you confidently choose your stocks and we provide ongoing updates advising you when to Buy/Hold/Sell. But how do you choose which shares to buy?
Follow these steps to choose which small cap shares to buy
1: How much cash do you want to invest in stocks?
2: Set up your portfolio structure following the basic rules of: cash (0-25%), small caps (20-30%), and big cap exposure with market linked investments/ (50-75%).
3: Work out what you think about the value of the overall share market. If you think it’s expensive, don’t put all your allocation for market linked securities in at once. Right now, we think the market is fully valued because investors have pushed up the value of Telstra and the Banks to historically high levels.
4: Look through our Best Ideas list and the week's latest research and click through to the research and the company page to read our latest research.
5: List 5 or 6 Small Caps Shares that you like and put them on a watch list, along-side another 10 Shares that you are not sure about, but could be interesting. Look at the share charts and whether or not they pay dividends.
6: You might like to do some more research yourself – look through their recent announcements, and through any news that you can get a hold of.
7: Work out, on the basis of the average PE of the market (which is about 14 times for industrial stocks) and 8 times for resource producers, whether you think they’re over or under valued.
8: Jump in and buy small holdings of those that you think are good value.
9: Watch your investments like a hawk and keep reading Under the Radar Report for research updates. We always review the company's results in reporting season (August and February) plus at other times during the year when there is news that will influence the share price.