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FP Answers: What’s the best way to pick good small-cap stocks for my investment portfolio?

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Contrary to popular opinion, small\u002Dcap stocks are not always young and unproven companies. Find out more.

You’re right that small caps receive nowhere near the amount of coverage of large caps. This is not necessarily a bad thing. The relative lack of analyst coverage and price projections mean that there can sometimes be a wide disparity between what a company is worth and its current price. Savvy investors can potentially benefit from this price differential once the valuation gap is closed.

There are a number of active fund managers who specialize in small caps, both domestic and international. Even for DIY investors, it may be prudent to outsource this sleeve of one’s portfolio to the specialists. Historically, small caps outperform large caps over the long term, so they can enhance total returns.

 

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FP Answers: What’s the best way to pick good small-cap stocks for my investment portfolio?Contrary to popular opinion, small\u002Dcap stocks are not always young and unproven companies. Find out more.
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