If you want big returns, you gotta think small – as in small-cap stocks. That’s not to say the large-capitalization enterprises can’t get you to investment Valhalla. However, the most diminutive companies have math on their side.
Basically, I’m referring to the law of small numbers. When you’re dealing with small-cap stocks, you’re almost always targeting businesses that don’t generate much attention. So, when a less-appreciated firm presents impressive financial performance metrics, they can send shares skyrocketing.
Of course, the opposite is true – less-than-encouraging news can quickly sink your holdings. You want to keep this risk-reward profile in mind. Still, if you’re able to handle the heat, these small-cap stocks could pack a serious punch.
This post appeared first on InvestorPlace.