đ„Tiny But Mighty: 4 Picocap Stocks on My Radar
High Risk Stocks with some High Potential
This article will never be a âfreeâ article, as these stocks are so tiny I donât want to be seen as some âpenny stock pumperâ - publicly promoting tiny companies to make personal profit on the pump.
However, I also have to consider that smaller companies need a higher share price more than any other stock in the stock market if they are going to succeed, as they need capital more than anyone else. So itâs not exactly fair to NOT discuss these small stocks simply because they are small, and their share price might go up a few pennies.
Itâs a struggle! The best I can do is say that I wonât buy or sell any of these stocks within a week of this article getting published, so I canât be accused of pumping or dumping if share price moves. However, I legitimately have interest in these companies on a financially fundamental reason (good little companies trending in the right directions) and I think for my paying subscribers this is worth talking about.
đ Letâs get ânot financial adviceâ out of the way. I donât say ânot financial adviceâ all the time, as investing in microcap stocks is really one of those âthe coffee is hotâ situations - there is always risk. However, specifically with picocaps (under $10M USD market cap) we have to discuss the risk (and then the rewards).
The risk is immense! These are true âstart upsâ where if the company raises money through dilution it can DOUBLE the share count to raise a few months worth of cash. Also donât forget the law of small numbers. While everyone buys a $0.02 stock expecting it to go to $0.04 and double their money, if the stock drops one penny to $0.01 you have lost HALF your money. Thatâs ugly!
In addition, when a picocap stock drops in share price, thereâs a good chance your stop losses execute you lose all your money, because many times they canât raise enough cash to pay for auditors and public filings (meaning they get delisted - and youâre stuck with a zero in your portfolio).
If youâre willing to take the risk of 100% loss, then buckle up and get ready for some potential rewards, and believe it or not there are many.
Reward #1
These companies are usually simple, and easily approachable - meaning information is available for research. For casual retail investors (who might only have a few hours per week to research a stock) being able to research one product or service and speak to a CEO happy to talk with any sized investor - is a huge advantage!
If a picocap has an overly complicated business model, or an unapproachable management team, then I simply move on to the 1000âs of other options.
Reward #2
Itâs probably the most fun you will ever have investing!
When you invest in a tiny start up and watch it execute and succeed to become a publicly traded stock and get discovered by the world. For an investor itâs very rewarding, like watching the kids get their first job and move out of the house. Iâve had many successful investments over the years, but the ones I remember the most have always been the tiny little unknown companies that grow up into institutional stock pitches on BNN Bloomberg and discussed daily by hundreds of investors.
Reward #3
Do you know what smaller investors can invest in, that larger investors canât?
Thatâs right⊠picocaps!
We talk about the âdiscovery processâ all the time, and recently I have been pointing out how investing groups like Small Cap Discoveries, MicrocapClub, and Keystone have gotten so large they can move share price of recommended stocks. Itâs pointless for these groups to recommend a stock thatâs trading $1,000 worth of shares per day to their hundreds of subscribers looking to invest millions (unless there is a financing). There isnât enough share volume for these groups to buy until the company succeeds and gets a little larger.
Meaning for smaller investors who might invest $500 per month and can buy a picocap stock before anyone else, there is an advantage that canât be ignored because youâre getting into a stock before ANY discovery.
Do I like to talk and write! I think you get the idea! With the disclaimers and brief risk vs reward discussion relatively complete, letâs talk about some stocks.
I am going to briefly introduce some picocap stocks I have interest in.
After I speak to management I will write individual articles for each company.