Companies are classified as small-cap when their market cap falls between $300 million and $2 billion. Whilst they are less stable than their large-cap counterparts, they offer greater growth potential. Therefore, holding stocks of small-cap companies will yield greater yields in the long run, as visualised by the graph below.
The performance of small cap stocks will only continue to increase as interest rates continue to fall. Investing in ETFs such as the Russell 2000 can increase your exposure to these stocks. The expense ratio for this ETF is quite low, at 0.19% only. The Fidelity Small Cap Growth Fund, which considers small-cap stocks with high growth potential, can also be considered. However, the fees of 0.94% are quite high for an ETF and should be considered.
Individual Stock to Pick?
Magnite (MGNI) is a digital advertising platform that has estabilished itself as a dominant player in the TV advertising and streaming industries. It has catered to big companies such as Netflix, Walt Disney, Fox and Warners Bros. In its Q3 earnings reports, Magnite showed an 8% year on year increase in revenue to $162 million, and earnings per share jumping from $0.13 to $0.17 over the fiscal year. Magnite is currently a strong buy based on 9/10 buy ratings.
drewtalksmoney 
Leave a comment