Smallcap stocks have a lower market capitalisation in comparison to largecap stocks. As per market regulator's categorization, companies which have a market capitalisation below Rs 50 bn are considered as smallcap stocks.
Smallcap companies tend to offer higher growth potential as compared to larger companies, but they also tend to be more volatile.
Historically, smallcap stocks have outperformed during times of economic recovery.
Investors with an appetite to take on some high risk and looking to make multibagger returns may consider investing in undervalued smallcap stocks.
Here are some factors you should consider while investing in smallcap stocks:
Take a look at some of the best smallcap stocks to buy.
Alternatively, you can browse through the Equitymaster stock screener to access an exhaustive list of smallcap stocks using a variety of filters like low debt to equity, high growth, high ROE, low PE ratio.
Happy smallcap investing!
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