They say that good things come in small packages, and investing in small capitalization stocks can offer plenty of advantages. To begin with, it’s easier to find hidden gems and undervalued opportunities among smaller companies that don't have the same degree of coverage from Wall Street analysts as the big corporations. Besides, all else the same, the smaller the company, the larger the room for growth in the long term.
On the other hand, a relatively small size also has important implications when it comes to risk. Small capitalization stocks are clearly more volatile. They