3 Micro-Cap Stocks to Buy and 1 to Avoid - Cabot Wealth Network

Comments

  • Deborah H.

    GLGI??? Plastics? We are trying to get away from plastic. I would run the other way….plastics should be phased out asap. Ditto oil. What do you think? deborah

  • Frank K.

    How is the term “liquidity” as used in this article of a given stock determined in order to segment the universe of stocks?

    • Rich H.

      Great question Frank. The proxy that i use for liquidity is shares outstanding. If you see a micro-cap with 1 billion shares outstanding, run the other way. I like to see less than 20mm shares outstanding. There are exceptions to the rule, but generally, the lower the number of shares outstanding, the better.

      • Frank K.

        Thank you, Rich. It’s interesting that regardless of the market cap, the highest quartile of liquidity (shares outstanding) provides significantly reduced returns relative to the lowest two quartiles. And as you note, the correlation is extreme for micro-caps.

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