It’s a great time to reevaluate your investment portfolio. As of early 2020, unemployment levels in the US are at a 50-year low, and the economy grew by 2.1% in the last quarter of 2019. It’s never been so simple to create a social network, so if you’re interested in making money, you’ve probably already been researching the best investment opportunities of 2020. You can watch website builder reviews 2020. You may have noticed that small caps are gaining more attention as we go into the new decade.
Small-capitalization stocks, or small caps, are listed companies with a stock market capitalization of between $250 million to $2 billion. You can trade them on any stock exchange, but most are listed on OTCBB or Nasdaq.
These investments have a reputation for being volatile and risky, but they also offer tremendous growth potential. If you choose wisely, you can invest in a young company and watch your investment grow as the business blossoms. A small firm has a lot more room to expand than a larger business. Mutual funds do not include small caps in their portfolio, so smaller investors have the chance to get in on the ground floor first.
Here are 7 of the smartest small-cap investment choices for 2020:
1. Ultra Clean Holdings Inc. (NAS: UCTT)
Ultra Clean Holdings specialize in the development and supply of semiconductor capital equipment, thin-film transistor arrays for the display industry, and other industrial products. The company was founded in 1991 and is headquartered in California.
Although the semiconductor sector has been hit in recent years, experts have recently predicted that this trend will reverse in the coming months. The company’s stock value increased by 176% in 2019, and they look set to continue the trend into 2020.
2. Chuy’s Holdings, Inc. (NAS: CHUY)
Chuy’s Holdings, which was founded in 1982 in Austin, Texas, operates 102 Tex-Mex eateries in 19 states. Founders John Zapp and Mike Young aimed to create a chain of restaurants known for serving authentic, freshly-made food in a family-friendly atmosphere. Chuy’s has a community-minded image, with each restaurant partnering with a local cause to support those in need.
The company’s stock gained considerable momentum in 2019. In November, Chuy’s reported a 7.8% increase in revenue compared to the third quarter of 2018, plus an increased restaurant-level profit boost of 11.4%.
3. Kodiak Sciences, Inc. (NAS: KOD)
Kodiak Sciences is a California-based biopharmaceutical company specializing in the development of treatments for retinal disease. Among other projects, they are currently pioneering new treatments for diabetic retinopathy, glaucoma, and age-related macular degeneration.
Their medicines are built on their proprietary Antibody Biopolymer Conjugate (ABC Platform). The ABC Platform is a significant scientific breakthrough, as it means Kodiak’s drugs remain active in the body’s tissue longer than treatments currently on the market. This means they are more potent and stable.
In November 2019, Kodiak’s stock greatly increased in value after they announced their decision to sell a 4.5% royalty right on sales of a new drug (KSI-301) to hedge fund Baker Bros. Advisors.
4. Forty Seven (NAS: FTSV)
Forty Seven is a biotech company that develops new cancer treatments, specifically those based on principles of immuno-oncology. Based in California, Forty Seven was only founded in 2015 but has already built a reputation as a force for innovation in the oncology field. Share values rocketed towards the end of 2019 and into early 2020, from $220 million in October to $1.6 billion in January.
The company’s research and mission is based on studies carried out by Stanford-based biologist Irving Weissman. His team discovered that the body’s immune system could potentially be harnessed to help destroy cancer cells. Forty Seven hopes to make effective immunotherapies available to cancer patients everywhere. Ultimately, they hope to create a world free from cancer.
5. Parker Drilling Co. (NYSE: PKD)
Parker Drilling, founded in 1934 and headquartered in Texas, supply drilling tools and services for oil and gas operators around the globe. They also offer project management services and advanced operations support. The company pulled off a turnaround last year, having been under Chapter 11 bankruptcy protection from December 2018 until March 2019. After their restructuring, share prices increased at a rapid pace.
6. Five Below (NAS: FIVE)
Five Below is a discount chain store aimed at teenagers and tweens. Founded in 2002 and headquartered in Philadelphia, it currently has 900 stores in 36 states across the US and plans to open over 100 more in 2020. Five Below sells a wide range of products across over a dozen categories, including books, DVDs, toys, fashion accessories, novelty items, and school supplies. Its tagline is “Let go & have fun!”
Although the company didn’t perform as well as expected over the holiday season, its overall performance is still following an upward trajectory. Five Below is also expanding its range, selling some products that cost up to ten dollars in their in-store “Ten Below” zones.
7. Axsome Therapeutics (NAS: AXSM)
Axsome Therapeutics is a New York-based biopharmaceutical company founded in 2012 that develops treatments for disorders of the central nervous system (CNS).
The company’s stock grew by 3,600% in 2019. This is largely thanks to its new drug, currently known as AXS-05, which has performed well in trials for the treatment of chronic clinical depression. The company has also presented evidence that the medication is effective as a smoking cessation aid.
The next step for Axsome is to get FDA approval for AXS-05, which may push share values even higher. They are also trialing treatments for narcolepsy, agitation in Alzheimer’s disease, and migraine, which have the potential to transform the lives of millions of Americans.
Now’s The Time To Invest In Small Caps
Small caps are less stable than larger companies, but they deserve a place in your investment portfolio. By diversifying your investments, you lower your overall risk. Investing in companies of varying sizes and in different stages of growth is a smart strategy for anyone serious about maximizing long-term gains.