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micro cap stock research? - Class 6 - 10-15-2012 08:12 PM
Where can I find reliable Micro- and Small-cap stock research before it hits the market? Are there any Twitter feeds that are helpful with this?
- Ted - 10-15-2012 08:20 PM
There isn't any. Research is done by analysts at big brokerage houses and independent places for large investors. Micro-cap, by definition, is too small for big investors to take a position in, so there is no market for the research.
- Priti - 10-15-2012 08:20 PM
Micro-cap companies don't generate fat investment banking fees for Wall Street firms, so they rarely enjoy regular research coverage by analysts.
As a result, it can take more time and effort to analyze a small company than a large one, and fewer published reports means an investor must do more original research.
The result, however, is that micro-cap stocks often don't trade at their full values, creating a price inefficiency from which savvy investors can benefit
When it comes to analyzing a micro-cap company,
the approach is the same as for a larger company; only what you emphasize in this analysis will differ.
Like any potential investment, you might start out by assessing the current stock price against its 52-week high/low trading range.
You might glance at valuation ratios, such as the price/earnings multiple or price/book multiple, to see if the stock looks cheap or expensive.
You'll probably review the company's financial statements to learn how much net profit is being earned on revenues,
how high debt levels are compared to the company's capital base and whether the company is generating cash or burning it