Small Cap Stocks


Small Cap Stocks


Small Cap stocks are generally those companies with market capitalization's of $300 million to $ 2 billion.

The capitalization of a company is figured by multiplying its stock price by the number of shares it has issued, or shares outstanding.

Stock trading Small Cap's are also commonly associated with growth stocks.

The Index in the stock market that measures theses smaller capitalization stocks is the Russel 2000. This index is comprised of the 2,000 lowest-capitalization stocks.

The Index serves the purpose of providing a good standard for investors who are primarily attracted to smaller-capitalization stocks, that may have better potential for high growth.

Stock investing in Small Capitalization stocks is considered riskier than in Large Cap stocks. By their nature, smaller companies are less proven. They sometime lack the proper financing or proper management experience.

However, precisely because of their size, they can deliver results of which larger companies are rarely capable.



Those with the most promising products or services have potential for explosive growth, and their managements often are entrepreneurial and visionary.

At one time, Large Cap giant's like Microsoft, were once a start-up small cap company.



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Volatile Stocks

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Small Capitalization stocks are more volatile than the Large Cap stocks, however over the long term, these stocks deliver superior returns.


The law of supply and demand determines the price of almost everything in your daily life. When you go to the grocery market, supply and demand affects the price of everything you buy.

The stock market does not escape this general principle. The law of supply and demand is more important than all the analyst opinions on Wall Street. In other words, big is not always better

A Large Cap stock with 300 million shares outstanding is hard to budge up in price because of the large supply of stock available.

On the other hand, if a company has only 30 million shares of stock outstanding, a reasonable amount of buying can push the stock price up rapidly because of the small available supply.



If you are choosing between two stocks to buy, one with 300 million shares outstanding, and the other with 30 million shares outstanding, the best Small Cap stock will be the smaller, and will usually be the rip-roaring performer if all other factors are equal.



Alright, now that I got you so excited, your probably asking yourself..."How do I find the best Small Capitalization stocks?"


The most well known stock trading system was made famous by William J. O'Neil.

In his book How To Make Money In Stocks, Bill O'Neil outlines his canslim system, using the Breakout Trading method.

And what's the best small cap stock list, with all the hot small cap stocks?

I personally use The Pitbull Investor, which coupled with it's Stock Screener, does all the small cap stock research for you.



These smaller capitalization stocks can move fast, does trading them fit your personality?

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