Are Micro-Cap Stocks More Immune to Market Crashes and Recessions?

Michael Markowski  |

The share prices of micro-cap companies (market capitalizations below $100 million) are uniquely positioned to appreciate significantly or multiply during extended periods of overall stock market declines and economic recessions. This is possible because companies that receive micro-cap valuations have one or both of the following common denominators:

  • Annualized revenue of less than $10 million.
  • Weak balance sheets.

Because micro-cap companies have low revenue bases and minimal assets, the fortunes of a company meeting the criterion of a micro-cap can turn very quickly. This can happen upon the company entering into a favorable contract or receiving a significant infusion of cash from a financing. Either of these events occurring could result in a small company’s revenue and profits increasing exponentially. It is much easier, and thus more rapid for a company that has revenue of $10 million or less to grow to $20 million (a growth rate of 100%), than it is for a company that has $1 billion in revenue to grow to $2 billion.

Research, conducted at the beginning of my 40-year career, enabled me to conclude that there was a mathematical correlation between a multiple increase in a company’s annual revenue and a multiple increase in its market capitalization — or share price. My 3 minute 59 second video interview below by SCN’s Jane King entitled, “Markowski, Visionary Analyst 1 of 5” provides details about how I discovered the mathematical correlation.

As an investment banker who specialized in financing micro-cap companies, I was able to gain practical experience regarding the mathematical correlation between a company’s revenue growth rate and share price appreciation. The research report and 2 minute and 57 second video below entitled, “Markowski, Visionary Analyst 2 of 5” provides details about my financing a micro-cap company when it was generating less than $10 million in revenue. The revenue of the company has since grown to more than $500 million and its share price has multiplied.

My passion is to be the first to discover a stock that has the potential to multiple by 10 times and become a ten bagger. During May of 2016, for the first time in my 40 year career, I launched an investment letter which is focused on finding these types of high risk and high reward companies. To obtain a free 30 day trial to my newsletter which includes my first four recommendations visit www.michaelmarkowski.net. The video below explains how I found two of these companies. The share prices of both of them multiplied by at least 20 times within 5 years.


DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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