Microcaps – How to Pick the Winners and Avoid the Losers

Microcap stocks – the small companies just at the beginning of their growth cycle – are where you make the big money. The really big money.

Venture capitalists know it. You and I know it. And I’ve made it pretty clear over the last couple of days here in MoneyWire.

Now let’s talk about how to pick the right microcap stocks for your portfolio.

Start by asking yourself: Am I hunting elephants or mice?

That sounds like something out of a children’s book. But what I’m saying is… do you want to invest in a company that’s going after something big, something in the middle, or a little niche?

Don’t get me wrong. I recommend some niche companies out there that do very well. But here’s an example of where you can go wrong if you invest in mice… a tiny niche.

Build-A-Bear Workshop (BBW) is a microcap stock with a market cap of about $70 million. It’s a company every American knows if they’ve ever shopped at an upscale mall. But it’s a store where you walk in, you build your bear (which is very expensive), and then you go home and might never come back.

Build-A-Bear has a very niche business model – and, to me, it’s a terrible one. I mean, just look at this chart below. Since 2012, most companies’ revenues have gone up… but Build-A-Bear sales are down 15%. And just since 2015, the stock is down more than 75%!

This stock managed to drop like a stone during a raging bull market. Why? Because the company went after the mice.

Just to give you an idea of what happened in retail during that time, take a look at Ross Stores (ROST), Ulta Beauty (ULTA), O’Reilly Automotive (ORLY) – three very different retailers, three stocks I found in my research. Here’s how their gains compare to Build-A-Bear’s in the same timeframe:

Just to make it very clear… Build-A-Bear is the blue line. The one that went down while all the others went up.

This is exactly why you want to hunt the elephants – not those mice.

Maximize Your Gains By Buying Early

Now, today, Ross Stores, O’Reilly, and Ulta are all large caps with market caps of $15-$40 billion. They’re followed by dozens of Wall Street analysts, and their earnings reports are covered in big news outlets.

But large caps don’t move nearly as fast as they did when the companies were just starting out:

  • After a friend tipped me off to Ulta – she actually dragged me there and I couldn’t believe what I saw – I researched the business, and my Ulta Beauty recommendation soared 2,043%!
  • Similarly, Stamps .com (STMP) rose a rare 2,772%.
  • And Advanced Micro Devices (AMD) grew 2,235% in its earlier days!

Just last year, Advanced Micro Devices was the best-performing large-cap stock, with a 148% gain in 2019. But to make the big money – for stock gains 10X or 20X that size – you want the type of early stage companies we’ll target in my new Microcap Millionaire Portfolio.

Next Wednesday, February 5, I’ll present my Microcap Millionaire strategy to the public. You’ll learn:

  1. The #1 mistake investors are making in the bull market right now, which could end up costing you tens of thousands of dollars. I will show you how to avoid falling into this trap.
  2. The top sectors and industries in which to find microcaps for rare 2,500% gains or more in the years to come.
  3. And details on how to claim my new Microcap Millionaire Portfolio. This is a model portfolio of my nine favorite microcap recommendations to own right now.

Click here to RSVP now.

P.S. A single microcap stock that I recommended in the past could’ve turned $10,000 invested into an extraordinary $277,000.

Just one winner like that goes a LONG way. So, believe me, my new Microcap Millionaire project is something you won’t want to miss.

Tune in on Wednesday, February 5 to discover the details on my favorite microcap stocks to own right now.

Matt McCall’s MoneyLine Podcast

Click here to listen to Matt McCall’s MoneyLine podcast! This week,  Matt discusses Amazon’s (AMZN) ascent to the $1 trillion value milestone. What does its rise tell us about investing and, more importantly, how do we find the next Amazon? Matt also dives into the upside potential of microcap stocks and unveils a new portfolio aimed at the smallest stocks in the market.

You can subscribe to this podcast on iTunes, Stitcher, Spotify, or wherever you listen to podcasts.

Learn where Matt McCall sees
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Those on the right side of this innovation stand to build incredible wealth… just like people did from the creation of the internet and the smartphone. Think of this as your “field guide” for profiting from the next big battery breakthrough. Learn more here.

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