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Wednesday, October 05, 2022 6:10:06 AM
Management Quality: A competent management team is essential for any company, let alone a smaller one trying to establish itself in the market. Potential investors should undertake some basic online research on the key people within the company, such as the CEO and chief financial officer (CFO). Do they have a track record of running successful businesses? Also, see if the leadership team owns shares in the company. Company insiders owning stock indicates a commitment to success and aligns their interests with those of the shareholders.
Growing Sales: Small-cap companies typically have limited cash flow—therefore, they must generate healthy sales. As a rule of thumb, small-cap investors should look for stocks with an annual revenue growth rate of at least 20%, which indicates that a company has the potential for disruptive innovation within its industry and is well positioned to generate a future profit. Investors can find this information on Yahoo! Finance under the "Financials" tab, which shows a company's revenue for the past three years.
High Operating Margins: A company's operating margin represents how efficiently it can generate profit through its primary operations before paying interest and tax. When investing in small caps, it is a good idea to look for consistently increasing operating margins, as this indicates that a company is good at turning sales into profits.
Advantages of Small-Cap Stocks
Growth Potential: Small-cap stocks provide investors with significant upside by getting in early before a company potentially goes on to become an industry leader. Moreover, small-cap stocks with a market capitalization of under $1 billion can double in value much easier than companies like Amazon or Apple that have $1 trillion-plus market caps, as it takes far less money to move their share price. Additionally, a small-cap stock that goes on to realize rapid growth can gain the attention of Wall Street analysts and institutional investors, which can increase shareholder returns even further.
Less Competition from Larger Investors: Institutional investors, such as banks, hedge funds, and REITs, typically stick to investing in large-cap stocks, often overlooking many small-cap opportunities. This allows retail investors to buy the story of a future company of tomorrow without competing with traditional Wall Street money.
One ticker that has a small market cap ($412.35M) and a CEO who is holding 81% of the stock is Regencell Bioscience ($RGC).
To get a sense of who is truly in control of Regencell Bioscience Holdings Limited (NASDAQ:RGC), it is important to understand the ownership structure of the business. With 81% stake, individual insiders possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises.
Data shows that insiders recently bought shares in the company and they were rewarded after market cap rose US$64m last week.
Let's take a closer look to see what the different types of shareholders can tell us about Regencell Bioscience Holdings.
What Does The Lack Of Institutional Ownership Tell Us About Regencell Bioscience Holdings?
Small companies that are not very actively traded often lack institutional investors, but it's less common to see large companies without them.
There are multiple explanations for why institutions don't own a stock. The most common is that the company is too small relative to funds under management, so the institution does not bother to look closely at the company.
https://www.investopedia.com/investing/top-small-cap-stocks/
Recent RGC News
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 06/20/2024 01:13:05 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 01/02/2024 11:04:03 AM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 12/15/2023 11:09:52 AM
- Form 20-F - Annual and transition report of foreign private issuers [Sections 13 or 15(d)] • Edgar (US Regulatory) • 10/27/2023 08:15:39 PM
VAYK Exited Caribbean Investments for $320,000 Profit • VAYK • Jun 27, 2024 9:00 AM
North Bay Resources Announces Successful Flotation Cell Test at Bishop Gold Mill, Inyo County, California • NBRI • Jun 27, 2024 9:00 AM
Branded Legacy, Inc. and Hemp Emu Announce Strategic Partnership to Enhance CBD Product Manufacturing • BLEG • Jun 27, 2024 8:30 AM
POET Wins "Best Optical AI Solution" in 2024 AI Breakthrough Awards Program • POET • Jun 26, 2024 10:09 AM
HealthLynked Promotes Bill Crupi to Chief Operating Officer • HLYK • Jun 26, 2024 8:00 AM
Bantec's Howco Short Term Department of Defense Contract Wins Will Exceed $1,100,000 for the current Quarter • BANT • Jun 25, 2024 10:00 AM