{"id":22029,"date":"2025-10-22T02:57:58","date_gmt":"2025-10-22T02:57:58","guid":{"rendered":"https:\/\/finderica.com\/?p=22029"},"modified":"2025-10-22T02:57:58","modified_gmt":"2025-10-22T02:57:58","slug":"the-right-way-to-own-small-cap-stocks","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=22029","title":{"rendered":"The Right Way to Own Small Cap Stocks"},"content":{"rendered":"
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Years ago, a friend of mine asked me for a stock recommendation or two. \u201cI need to make some money,\u201d he said.<\/p>\n

I told him I really liked Texas Instruments<\/strong> (Nasdaq: TXN). \u201cThe calculator company?!\u201d he exclaimed. \u201cYes, the calculator company,\u201d I replied, rolling my eyes.<\/p>\n

I explained that while there are still calculators out there with Texas Instruments\u2019 name on them, the company is one of the world\u2019s leading semiconductor makers. And it pays a nice dividend.<\/p>\n

He snored loudly, pretending to be asleep.<\/p>\n

I then told him about Raytheon Technologies<\/strong> (NYSE: RTX). The government never gets tired of spending money on new toys for the military.<\/p>\n

\u201cC\u2019mon, Marc\u2026 give me something exciting,\u201d he demanded.<\/p>\n

\u201cOkay, how about Digital Realty Trust<\/strong> (NYSE: DLR)?\u201d<\/p>\n

I explained that this company is a real estate investment trust that rents out shelf space to household-name companies to place their servers. It generates a ton of cash and also pays a solid dividend.<\/p>\n

\u201cBooorrrring!!!\u201d he cried.<\/p>\n

Had he invested in those companies, he wouldn\u2019t have thought they were boring at all. Texas Instruments became the second-biggest winner in the history of my monthly newsletter, The Oxford Income Letter<\/em>, gaining over 450% in 10 years. I sold Digital Realty Trust in 2022 for a more than 220% gain in eight years. Raytheon, now called RTX, is still in the Oxford Income Letter<\/em> portfolio and is up 792% since 2013.<\/p>\n

But my friend wanted something tiny that could really move.<\/p>\n

There\u2019s a misperception in the market that low-priced stocks can move faster than high-priced stocks.<\/p>\n

Tell that to anyone who bought Nvidia<\/strong> (Nasdaq: NVDA) at $400 or Goldman Sachs<\/strong> (NYSE: GS) for $300 two years ago. They\u2019ll laugh in your face. Goldman Sachs has more than doubled to $760 since then, and Nvidia has more than quadrupled (it underwent a 10-for-1 stock split in 2024).<\/p>\n

Still, there is something exciting about owning a lot of shares of a low-priced, very small company. And when tiny companies move, they can move fast.<\/p>\n

Look at RedCloud Holdings<\/strong> (Nasdaq: RCT). It was trading between $1.40 and $1.70 in June of this year. But by July 1, it had tripled to $4.29.<\/p>\n

PepGen<\/strong> (Nasdaq: PEPG) recently doubled \u2013 from below $2 to over $4 \u2013 in just a month.<\/p>\n

And Dominari Holdings<\/strong> (Nasdaq: DOMH) skyrocketed nearly 13X, rising from $1 to $13, from mid-January to mid-February.<\/p>\n

That\u2019s the kind of action most people who get involved in microcap stocks are looking for.<\/p>\n

And there\u2019s nothing wrong with that as long as you know the risks and position size accordingly.<\/p>\n

Many investors don\u2019t know this, but you can also find microcaps that pay dividends.<\/p>\n

For example, Kimbell Royalty Partners<\/strong> (NYSE: KRP) has a market cap of just $1.4 billion and yields almost 12%.<\/p>\n

And $30 million market cap Crown Crafts<\/strong> (Nasdaq: CRWS) sports an 11% yield.<\/p>\n

That brings me to another point: Microcaps don\u2019t have to be startups that have recently gone public or are involved in Bitcoin or some other speculative technology.<\/p>\n

Crown Crafts makes baby furniture and has been around for almost 70 years.<\/p>\n

I tell investors that when creating a portfolio, they should diversify into various sectors, geographies, and market caps. There are times when large cap companies outperform and other times when small cap or microcap companies are better.<\/p>\n

No doubt, my buddy was looking for one of those microcaps that are about to take off. Everybody is. And it\u2019s okay to invest in these types of companies.<\/p>\n

In fact, I recommend that investors include microcaps in their portfolios so they have exposure to these small companies that can double or triple in a short period of time in some cases and fly under the radar in others.<\/p>\n

Just be sure you know why you\u2019re buying a stock, and have an exit plan (like a stop) set up ahead of time. This ensures that you will sell if things change or grab profits when it\u2019s time.<\/p>\n<\/p><\/div>\n