Small-Cap Investments for the Savvy Investor

If you’re into virtual reality (VR), you know the industry is constantly evolving and that there are a ton of companies coming out with incredible technology every day. Investing in one of these small-cap companies can be a little risky, but the reward can be great. Keep reading to learn more about small-cap investing, why it’s a good idea, and some of the top tech small-cap companies to invest in.

What Is a Small-Cap Investment?

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Small-cap, or small capitalization, is a term that refers to companies with a market capitalization between $250 million and $2 billion. These companies are usually new, operate in a new industry, or have a niche market. Because of this, they’re often considered riskier investments.

Why Is Small-Cap Investing a Good Idea?

Small-cap stocks may come with their fair share of risks, but this is true with most investments. Some of the benefits of small-cop stocks include:

  • Wall Street gives them less attention: Small-cap value stocks get less attention and minimal analyst coverage, allowing them to regularly outperform larger companies as an asset class. This is because the lack of attention causes small-cap stocks to be undervalued, allowing them to gain much higher returns.
  • Large, institutional investors are discouraged: In order for big mutual funds to purchase enough small-cap stocks to impact their institution’s performance, they’d have to buy up 20% or more of a company. The regulations of the Securities and Exchange Commission make it difficult for mutual funds to gain such sizable positions. This makes it possible for individual investors to spot a promising company and get in before institutions get the chance to buy a bunch of shares and drive up the price.
  • The potential for growth is huge: Even the biggest companies were once small-caps. Large-caps have very little potential for growth because they can’t monopolize the whole market, but small-caps have incredible potential to grow. Because of this, even a conservative investment could eventually turn into a sizable sum.

Top Tech Small-Cap Investments

There are a ton of great small-cap investment opportunities. Some of the best tech small-cap stocks include:

  • Unisys Corp.: Unisys Corp., or UIS, is a company that provides information technology services, like security, network, mobility, data analytics, and outsourcing services. Their market cap is a little over $670 million and the current share price is only $10.66.
  • YDx Innovation Corp.: YDx offers technology and graphic design services with a focus on VR. They’re technically a micro-cap company, coming in with a market cap of just $3.59 million. The share price is incredibly low at $0.18.
  • Spectra7 Microsystems (SEV): This small tech company is technically a micro-cap as well, with a market cap of just $10.21 million. The focus of SEV is to make our everyday electronic devices higher-performing, lighter, and thinner. They create head-mounted displays, data centers, Ultra HD display, and ultra-thin 4K panels for augmented reality (AR) and VR. The current share price is an astounding $0.02.

The tech industry is teeming with innovative companies that are on the brink of greatness. If you’re looking to invest at the ground level of the next tech giant, you can find a ton of promising small-cap companies to choose from.

Posted in: Personal Finance

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