Generally, low profile stocks fall into the category of small cap stocks. Many of us have misconceptions about stock investing that you need a big amount of money for investment. Also, stock investing is reserved only for the rich. The truth is we can start with as little as Rs.20 in the stock market. From this article, you will get to know the tips and tricks of making money from low profile stocks. Though small cap investment is riskier compared to mid and large cap stocks, the profit making potential is huge here. You may train yourself professionally by enrolling your name in Technical Analysis Course in Kolkata, where you will get hands on training from industry experts who have more than 12+ years of experience in trading, investment and portfolio management.
How to find out best Low Profile Stocks for Investment?
1. Find companies with strong business model
Always try to find companies with unique and strong business mode. These companies are capable of providing profits in the long run. Suppose you see that a new small company with weak business model is surrounded and dominated by other strong competent companies, then there will be a higher chance of shut down the company sooner than later.
2. Choose good volume stocks
Small companies with good volumes are always better. Traders can monitor and identify the good volume stocks by technical analysis. As we know that generally low profile stocks tends to be influenced by daily market fluctuations. For this reasons, these stocks are volatile in nature. As a result, these low profile stocks perform really well during the uptrend market but show underperformance during the downtrend.
3. Invest in small companies with big opportunities
To identify the small companies with big opportunities proper research and analysis is needed. Investors who only eager to invest in small companies, always did proper research prior to investment. You may find plenty of stocks suggestions from magazines, websites, and all. From there make a list and analyze it both fundamentally and technically. Small companies are riskier for investment but also have huge growth potentials.
4. Invest before big institutions notice them
This is one of the best strategies that successful investors follow. According to the strategy just rob the train before it arrives at the final station. By a thorough research and analysis, you can invest in potential companies before most big investors invest in it.
Like, try to invest in companies that have institutional ownership less than 50%. The reason is simple, before institutional investment, the stock price is low. On that point, you need to find out the stock. After institutional investment the stock price will be higher.
5. Research the Fundamentals Thoroughly
Always apply valuation method prior to investment. A good company report always reflects demonstrated significant sales growth, minimum debt figure, and proper stock price as per the market capitalization. You can also rely on their balance sheet, cash flow, events, to get a general idea about the health of the company.
How to make maximum profits from low profile stocks?
- There are general sayings that buy at the bottom and sell at the top. Here, all the confusion comes because identify the market tops and bottoms are not an easy work. One needs to have knowledge as well as experience to identify the market signals. Low profile stocks basically go with the market trend, so keep an eye on that. Basics of technical analysis are also required for it.
- If your objective is long term wealth creation, allocate your funds smartly. Do not put all your capital in small cap stocks. Equity allocation is a very vital thing to consider. Another important point is when you see that your portfolio is in profit; try not to sell a bulk of your holdings. Sell only a part and keep the remaining amount for another level. Due to bulk selling, you may miss biggest opportunities later. Benefits of earning compounding are huge. So, wait for the right moment to sell.
Time is a biggest factor of profit. Within a day or within some minutes also stock price can fluctuate heavily. If you want to play considerably safe, you may go with the SIP idea. Here, you need to invest some amount every month to avoid bigger risk and maximizing the profits. Do not panic on small market correction, focus on your target.
Another important point is to make yourself clear about which stock to hold and which stocks to let go. This may differ from investor to investor. Holding losing stocks over years can cause further damage. On the other hand, holding winning stocks due to greed can also cause damage to your portfolio. The solution is book 25% to 50% of your shares when target 1 is achieved.
Key points of advantages of investment in small cap stocks
- These stocks have greater growth potential comparison to large and mid cap stocks.
- Investors can get shares with fairly priced.
- A good research can help to find out low priced best quality stocks.
However, nowadays many manipulation fraud cases happen in low profile stocks. So, be aware of that before investing on them. Do your research and analysis, take part in Stock Market Training Center in Kolkata, where our expert teacher will guide you to make the right decisions over stocks. Prepare yourself before investment because it’s your money after all. Invest it wisely and smartly. Buy shares when the market is down and everyone is selling out of fear. Oppositely, sell shares when the market is on the peak. That’s the basic and core strategy of every successful investor.