Investing in small-cap stocks is not for the fainthearted. These small companies have market capitalizations ranging from $250 million to approximately $2 billion. These usually have more room for growth than large-cap companies, because they are typically in the early stages of development or are niche players in their industries. However, they often have higher volatility than large-cap stocks.
Generally, investors prefer large-cap stocks, such as Amazon (AMZN), Microsoft (MSFT), and Nvidia (NVDA), as these companies are well-established and financially stable. Nonetheless, a recent report from Tom Lee, head of research at Fundstrat Global Advisors, has altered the narrative around small-cap stocks. Lee, who has always favored small-cap stocks, recently stated that they represent the "most compelling near-term investment case."
