Sep 7, 2012

Posted by in Penny Stock | 0 Comments

Researching Small Cap Tech Stocks

Why Small Cap Tech Stocks Are a Good Buy

People may be attracted to small cap tech stocks for two initial reasons. First, they may like the idea of owning tech stock because it gives them a chance to have a hand in the future. It is exciting to take part in the latest innovation, whether it is in communications, industry, aerospace or any other advanced subject. Second, they may like the low price tag that often accompanies these stock shares.

There is a lot more, though, to owning small cap tech stocks than these issues. You should avoid just buying into any stock with an appealing name and a more appealing price tag. There is a reason that high-priced stocks are worth so much. They have proven their long-term value and their leadership have demonstrated wisdom over the years in their business decisions. For converse reasons, there are good reasons for low-value stocks to have small price tags. They have yet to prove themselves.

It is up to you to determine why any one of the countless small cap tech stocks deserves your money. You should look for certain characteristics that will give you a better idea of the future value of this stock. Do not let the company’s new gadget or software overwhelm you. Even with good ideas, a stock can plummet in value if there is something wrong with the company’s fundamentals.

Review a company’s balance sheet before anything else. The business should be increasing its earnings from year to year. It should also be decreasing its debt. Failure to do one of these things is not a sure sign of failure but you should not risk your money with small caps until they can show you that they are making financial progress.

A List of Small Cap Tech Stocks

Here are some of the hottest small cap tech stocks right now. Research them for yourself to see why they have garnered so much interest.

• Tessera Technologies
• Monolithic Power Systems, Inc.
• Sonus Networks, Inc.
• Volterra Semiconductor Corporation
• Encore Wire Corp.
• Acme Packet, Inc.

Each of these stocks has garnered interest in the trading community. That is not a guarantee of performance. You must do your own research into these companies to determine if you want to risk your money with them. In the end, risk is what produces profits in the stock market. It would be a good idea to include at least one of the small cap tech stocks in your portfolio.

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