5 easy rules to find good small-cap stocks
This week I want to return to my back-to-basics theme, with a look at a simple set of rules that might be used to help find good small-cap stocks. The smaller end of the stock market can be a fertile hunting ground for growth stocks and potential multibaggers, as Ed discussed in his recent webinar and masterclasses.
(In the previous instalment of this mini-series, I created a simple screen to help find good dividend stocks – you can find that here.)
It’s easy to build more complicated screens with lots of rules – and that’s something I quite like to do. But I’ve often found that after a while, there can sometimes be a certain amount of overlap and redundancy between rules.
Screens can also become too exclusive, as good companies don’t necessarily fit an exact financial profile.
On a related note, it’s worth remembering that screen results are always best used as a tool to narrow down the market and provide ideas for further research. With this in mind, I think there’s some value in trying to distil what we’re looking for to its simplest form.
Given the historical success rate of the StockRanks,...