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The opportunity for a small company that captures even a fraction of this market would be enormous. Research tells us that treatment for this condition will cost upward of $10 billion per year. Here’s an example: By the age of 60, half of all men will have an enlarged prostate, a condition known as Benign Prostatic Hyperplasia (BPH). Large medical patient populations and new technology users are examples of vast markets to target. The sheer size of the markets creates the potential for huge gains while helping to reduce your risk profile. This is the Law of Large Numbers: Only invest in small companies that serve large, burgeoning markets because the companies can realize tremendous growth with even small market share. Invest only when the market opportunity is huge-and quantifiable I try to dig deep to uncover the small company suppliers to the transition leaders-just as the top suppliers to Cisco, Sonic Solutions and Hansen became equal beneficiaries of the paradigm shifts, yet remained largely unnoticed by institutional investors until well into their industry transitions. Hansen Natural (HANS) stepped in to become the leader and its stock, now renamed Monster Beverage (MNST), has been one of the best performers of the post-2002 bull market.
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In the consumer market, energy drinks burst on the scene in the late 1990s, giving the industry its first truly new product in decades.
Micro cap stocks to buy software#
Sonic Solutions (SNIC) provided the software for conversion to the new DVD format and its stock took off. All the new personal computers needed to be connected! And Cisco (CSCO) filled the void, supplying the industry with networking tools and its stock increased 70-fold.Īnother example was the move from CD to DVD format. I call these companies “pure plays.”Ī good example of such a paradigm shift was the move from the mainframe computer environment to the personal computer environment in the 1990s. I then seek a niche supplier that will become an equal benefactor to that pioneering company. I search for paradigm shifts in any field of business that requires a unique, new solution that will be provided by a stand-alone company. Search for paradigm shifts that are opening up new opportunities.
Micro cap stocks to buy how to#
How to Find Small-Cap Stocks Here’s how to find small-cap stocks in five steps:ġ. Getting more specific, there are a few steps that I follow to insure that every small-company stock I recommend has the potential to bring strong profits.
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My forensic research digs significantly deeper into the industry and company to uncover information that gives me a unique advantage over the big boys. The common thread will always be that I see 100% or greater upside with each stock within a two-year time frame.īecause it’s institutional investors who drive up stock prices, I look for the same thing they look for, but because I’m seeking far greater returns, my approach must be different. The corner convenience store, the healthy food manufacturer, the high-volume concrete company … a lot of money can be made by keeping things simple. A lot of very successful small-cap investments come from very basic business models. In many cases, these companies are creating whole new micro-industries, providing essential tools for an entire industry’s growth, or doing something better or faster than in the past.īut I don’t like to discount traditional businesses. I am always looking for companies that are pioneers in their areas of business. Find out which stocks you should buy this month to make money in this volatile market.