Blue-chip companies rightfully make up the bulk of most people’s investment portfolios. These large-cap firms possess considerable industry leverage, as well as a vast sum of financial resources. Their status and importance to the underlying economy means that they are the least likely to crumble, regardless of external pressures. Ultimately, blue chips provide the confidence and stability to which you can pin your long-term hopes.
But there’s a reason most financial advisers say to have at least a small allocation to speculative investments. Those large caps can offer somewhat modest returns. Single-digit annual gains and a 2% dividend yield? No … here and there, investors should try to generate bigger returns from more explosive small- and even micro-cap stocks.
Micro-cap stocks, as the name suggests, are tiny companies — they typically have little financial backstop, and often pin their hopes on a single product or service. Or they might be the specialty parts supplier to a larger client. So long as business is good, micro-cap stocks can soar to the moon. But as soon as anything upsets the supply chain, disaster is only a mouse click away.
While many investors think nothing of investing in small-cap and micro-cap biotech companies, there are plenty of high-growth opportunities outside the medical arena. Technology, media and even defense — there are smaller companies trying to break through just about everywhere.
Of course, most micro-cap stocks — especially those that trade over the counter — are complete garbage, existing only because morally rudderless attorneys were willing to legitimize a fly-by-night operation. But a few smaller companies actually trade on real exchanges and have honest-to-god legitimate financial results — so you at least have a better measure of what they are and the direction they’re heading.
Many of these investments still entail enormous risks, but if you’re looking for somewhere to put the speculative funds in your portfolio for 2017, you could do worse than these 10 micro-cap stocks to buy: