You’re looking for small-caps with the potential to grow earnings. How do you know earnings will grow? Well, maybe it’s as simple as looking at the industry. Small-caps ready to double, triple and quadruple can be found in the resource, tech, finance and a whole bunch of other sectors. But when trying to grab a 10-bagger, it helps to look in growing markets.
Last month, Westfield London launched the first phase of its million-dollar expansion, which was well ahead of schedule. Westfield, whose share price grew 1.49% this morning, will feature the largest shopping centre in Europe once the expansions are complete.
We’ve been preparing for life in a bear market for some time. By this I mean giving ourselves every chance of making some money while also recognising the downside risks of a market potentially transitioning from bull to bear. How is this transition looking now?
Small-caps are an amazing opportunity. They have far more volatility, but that’s the point. Not all small-caps are worthy investments. Some could be amazing. Others you’d be completely crazy to buy. Today we’re going to look at how to approach small-cap investing. Specifically, we’re going to look at how to limit our losses.
Still, who exactly was buying last week when the share price was north of $5.50? Seriously, I spent about 30 mins looking at the numbers and doing some high school maths that I managed to remember, and concluded the stock wasn’t worth touching with the proverbial barge pole. It was plain to see, even for someone as simple as me, that this thing was radioactive.
Blue Sky Limited shares are currently trading at $4.08, the lowest price for the company in almost three years. Blue Sky’s share price has dropped a total of over 64% in the past month alone, from $11.43 on 27 March.
Let’s look at the large blue chips. These are usually companies with a market cap of $10 billion and over. Some typical blue chips are BHP Billiton Limited [ASX:BHP] and Commonwealth Bank of Australia [ASX:CBA]. BHP has a market cap of $156 billion and CBA has a market cap of $139 billion.
Big institutional investors, for example, usually don’t venture into the small end of town mainly because of their size. Many of these money managers have hundreds of millions to put to work — they simply can’t invest in smaller stocks. That’s why I’d argue small-cap investing is perfect for individual investors, like you.
How often do you take stock? It could be with your career, share portfolio or life in general. New Year’s Day is a popular choice for reflection. Many people use this as a time to look back at the year that was. It’s a chance to consider what went well, or not so well.
Before you can start to find small-cap gems hidden on the ASX, you first need to find gems in the market, and we need to know what small-caps are. So let’s cover some basics. Like the name suggests, small-cap stocks are small stocks.