Small Cap Opportunities

Stockreporter.de focuses on finding undiscovered small and micro cap stocks. Many of the companies featured on this website are listed on NASDAQ Small Cap, BB or CDNX. There are four compelling reasons Stockreporter.de focuses on small and micro cap companies:

1. Small cap stocks, defined as companies under US$500-750 million market capitalization, historically have outperformed the market by almost 100%. Historical data has borne out that the average annual growth rate for small cap stocks (19.2%) has been almost twice the growth rate for the S&P 500 during the past 70 years. More than 10,000 small cap companies currently trade publicly in the United States. Stock Prophets’ objective is to selectively profile 12-18 companies per year, each of which possesses enormous growth potential and meets Stock Prophets’ proprietary selection criteria.

2. Small cap stock valuations are at the most attractive levels they have been in the last 25 years relative to large cap stock valuations. During the last 25 years, large cap stocks within the U.S. have accounted for between 55% and 75% of the total market capitalization. Currently, large cap stocks account for 75% of the total market capitalization of the U.S. equity markets. When compared to small cap stocks, large cap stocks dominate the U.S. equity markets. This relationship implicitly points to the conclusion that small cap stocks are extremely undervalued relative to large cap stocks.

3. Generally, small cap companies have little or no analyst coverage. Therefore, much less information about them is disseminated to the marketplace compared to the information available on most large cap companies. Individual investors who do their own research can often find bargains or inefficiently priced stocks that trade at discounts to where they would be trading if they were widely known. Large cap stocks tend to have at least a few analysts covering them, resulting in more efficient pricing. Conversely, small cap stocks have little or no analyst coverage, resulting in greater risk as well as greater potential for reward for the knowledgeable investor. As more analysts and investors learn about a given company, its price tends to move closer to the company’s true valuation. Stockreporter.de looks to discover small cap stocks that have the potential to be the next Microsoft, AOL or Yahoo before Wall Street analysts and institutions find them. Stockreporter.de caters to the entrepreneurial individual investor and looks to feature companies which will become successful and could eventually achieve listing on bigger exchanges like National NASDAQ, American, and NYSE. These bigger exchanges attract more analyst coverage and more media exposure.

4. The worldwide web has opened up the small cap investment frontier to individual investors. For years professional investors, brokers, and analysts had financial data locked up. With the ongoing revolution in technology, investors can access data, do research to find their own investment ideas via the internet, and then execute trades themselves through online brokerages. Stockreporter.de aims to assist the aggressive individual investor by profiling selected small cap companies early in their growth cycles. In addition, we encourage members to take advantage of the several free services provided on our website.