Micro-cap stocks are defined as companies with a market valuation of $50 to $300 million. These stocks, therefore, represent early-stage companies with a small equity base. Two more things follow.
First, micro-cap stocks carry an extremely high risk; a small part of the portfolio should be allocated to these names. I would compare micro-cap stocks to investing in a decent cryptocurrency project.
Further, the returns in micro-cap stocks can be multi-fold if the companies they represent deliver and grow at a stellar pace. Given the risk involved, I would not consider more than 5% to 10% portfolio exposure to these stocks. That’s, however, enough to boost overall portfolio returns as I am focused on micro-cap stocks with 10x potential.
I believe these micro-cap stocks can deliver 10x returns within the next 36 months. Let’s discuss the reasons to be optimistic.
This post originally appeared at InvestorPlace.