What’s A Microcap Stock?

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• Hi, My name is Aaron and Im with Penny Stock
  Research, today were reviewing our recently
  published article

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Whats A Microcap Stock?
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What Do You Know About Microcap Stocks?
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These days we've been getting a lot of questions
from readers about microcap stocks. Theres a
problem among traders. I think the biggest
misconception we have is the difference between
microcap stocks, penny stocks, and small stocks
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Dont you love vocabulary? Penny stock, small
stock, microcap stock... whats the
difference? Are you ready for a shocker Ive
got no idea.
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And nobody else does either. You see, theres no
Official definition for microcap stock, penny
stock, or small stock. Sorry to burst your
bubble. But let me help you understand a few
things.
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Whats The Price Of A Microcap Stock?
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Some people believe a microcap stock is simply a
stock that trades for under 5 a share. Others
think its a stock trading for under 1 a
share. And just for clarity.
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The Securities Exchange Commission (SEC)
defines a penny stock as a stock trading for
under 5. Why 5? No idea. Thats just the
number they picked.
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What do they say for a microcap stock? Nothing.
They dont talk about microcap stocks
much. Despite their silence, the term microcap
stock has spread like wildfire.
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Now I know some of you are wondering is there
another way to define microcap stocks?
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Microcap Stock Total Value
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There are other ways to value a company, stock
price is not the only way. Some investors define
the size of a company based NOT on stock price,
but on the value of the entire business.
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Theses investors see a microcap stock as any
company with a market cap under a certain
value. For example, many investors label
companies valued at 300 million or under a
microcap stock.
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That means the stock could trade for 75 a share
and still be a microcap stock. Whats so special
about 300 million?
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Nothing. Absolutely nothing. Some use 1
billion and below as the cutoff line. Others use
250 million!
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Look, at the end of the day, you can call a stock
a small cap, a microcap, or a penny
stockessentially youre focused on smaller
companies flying under the radar of big investors!
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So How Do I Define A Microcap Stock?
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Dont fall out of your chair, but for me, a
microcap stock, a penny stock, or a small stock
are all the same things. For me, theyre
companies with a market cap of LESS than 1
billion AND a stock price under 10. Broad yes.
But its what works for me.
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However you define penny stocks, remember these
kinds of stocks or any stocks for that matter
are risky. You dont want to spend your rent
money or food money on them. And, while Im at
it as a general rule of thumb, they should only
play a small part of your investment portfolio.
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How much is up to you.. but many professionals
say it should be 10 or less.
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So, what do you think is a penny stock a
microcap stock? Does a microcap stock have a
market cap under 300 million or 1 Billion? Let
me know by commenting on the blog. Good
investing.
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