Small Cap Stocks: How to Find and Buy Them

Small cap stocks can grow fast and are cheaper than large cap. These lesser known stocks have the potential for huge returns. Then practice what you’ve learned with our free stock market simulation.

Small Cap Stocks List

Here are some smaller stocks that have potential, courtesy of Yahoo!

SymbolCompany
ORGNOrigin Materials Inc.
SKINThe Beauty Health Company
TWNKHostess Brands Inc.
TPBTurning Point Brands Inc.
EGLEEagle Bulk Shipping Inc.

What are Small Cap Stocks?

Small cap stocks are not actually that small. Small cap refers to the market capitalization of a company. While the range can vary depending on who you ask, small cap refers to a company with a market capitalization between $200 million and $2.5 billion. But what does that mean? Market capitalization has two parts, share price and number of outstanding shares. Multiply those two numbers together and you get what is called market cap. Share price is simply the price that a given stock sells for on the marketplace. Outstanding shares on the other hand, refers how many shares the company has issued. Small cap businesses are established, but are dwarfed by tech giants like AAPL, which has market capitalization at over $700 billion.

How to Find Small Cap Stocks to Buy

Small cap stocks are everywhere. These companies aren’t your big fish that everyone has heard of, but can offer great returns in their own right. One of the best attributes of small cap stocks is that they have great growth potential. You hear all the time about people who invested relatively small sums into tech companies like GOOGLE and made ridiculous amounts of money. Invest in the right small cap stock and that could be you.

The reason these smaller stocks are able to grow so fast is that they still have a relatively low market capitalization. Its just not possible for bigger companies to grow as fast because they would eventually become unsustainably large. On other hand, a smaller company can double its market cap many times over as they come into their own. Choosing the right stock is the key to investing in smaller stocks.

Small cap stocks are great because their is less competition from institutional investors. Their funds are so massive that buying a smaller company has little effect on their bottom line. That means a level playing field, and great value with lucrative rewards. Every giant was once a small fry. Who knows what the next Microsoft will be?

Small Cap Mutual Funds

While it is difficult for mutual funds to invest in small cap stocks, there are some who specialize in taking positions in smaller companies. These mutual funds are highly specialized and require tons of man power due to the number of businesses they invest in. Because small cap mutual funds can only invest so much in each company, they end up investing in hundreds of different small companies. This can be a lot to manage considering each business has their own growth and risk.

Fund management can really shine when it comes to picking small cap stocks. That’s because any hidden gem can result in a enormous return as they balloon in size. Imagine buying shares in tech giants like Microsoft, Facebook and Google before they made it big. When a fund manager hits a home run, anyone who invested in that mutual fund stands to make some cash. Look for well managed funds because the return will outweigh the manager’s cut of the profits.

Not all small cap stocks turn into giants, its actually quite rare. That’s why small cap mutual funds diversify into hundreds of different companies. Even if they don’t get lucky, a lot of small cap stocks still have great value.

Motley Fool Stocks Set Another Record, now up 1,062%. Learn more & Save $100 here.
Next stock pick released July 17th.

Get Up to $1,700 in FREE Stock

When you open a Robinhood Brokerage Account

Robinhood was the first brokerage site to NOT charge commissions when they opened in 2013. In June, 2025 they reached 23,000,000 accounts and to celebrate they are offering up to $1,700 in free stock when you open a new account.

Here's the details: You must click on a special promo link to open your new Robinhood account. Then when you fund your account with at least $10, you will receive one stock valued between $5 and $200. Then, you will get a link to share with your friends. Every time one of your friends opens an account, up to 5 a year, you will receive another free stock valued between $5 and $200. See details on this Robinhood free stock offer.

Open your Robinhood account and claim your first free stock NOW

(before it's too late)

The Best Stock Newsletters as of June 29, 2025

Ranking of Top Stock Newsletters Based on Last 3 Years of Stock Picks

We are paid subscribers to dozens of stock newsletters. We actively track every recommendation from all of these services, calculate performance, and share the results of the top performing stock newsletters whose subscriptions fees are under $500. The main metric to look for is "Excess Return" which is their return above that of the S&P500. So, based on last 3 years ending June 29, 2025:

RankStock NewsletterStock
Picks
Average
Return
Excess
Return
Percent
Profitable
Max %
Return
1.Seeking Alpha logo
Alpha Picks
7663%40%73%969%
Summary: 2 picks/month based on Seeking Alpha's Quant Rating; Retail Price is $499/yr. See details in our Alpha Picks Review.July, 2025 Promotion:
Save $50
2.Moby logo tiny
Moby.co
30843.3%12.3%74%1764%
Summary: 60-150 stock picks per year, segmented by industry; Retail Price is $199/yr. Read our Moby Review.July, 2025 Promotion:Next pick free!
3.Motley Fool logo
Stock Advisor
7241.2%6.9%78%258%
Summary: 2 picks/month and 2 Best Buy Stocks lists focusing on high growth potential stocks over 5 years; Retail Price is $199/yr.
Read our Motley Fool Review.
July, 2025 Promotion: Get $100 Off
4.Zacks logo
Value Investor
3917.5%6.1%38%410%
Summary: 10-25 stock picks per year based on Zacks' Quant Rating; Retail Price is $495/yr. Read our Zacks Review.July, 2025 PROMOTION:$1, then $495/yr
5.Motley Fool logo
Rule Breakers
6640.0%4.7%61%311%
Summary: 2 picks/month focusing on disruptive technology and business models; Lifetime average return of 355% vs S&P500's 149% since 2005; Now part of Motley Fool Epic. Read our Motley Fool Epic Review.Current Promotion: Save $200
6.TipRanks logo
TipRanks SmartInvestor
12110.6%3.7%55%340%
Summary: About 1 pick/week focusing on short term trades; Lifetime average return of 355% vs S&P500's 149% since 2015. Retail Price is $379/yr. Read our TipRanks Review.Current Promotion: Save $180
7.TheStreet logo
Action Alerts Plus
39420.0%3.4%57%220%
Summary: 100-150 trades per year, lots of buying and selling and short term trades. Read our Jim Cramer Review.Current Promotion: None
8.Motley Fool logo
Stock Advisor Canada
3632.3%0.5%69%378%
Summary: 1 pick/month from the Toronto stock exchange; Retail Price is CD$199/yr. Read our Motley Fool Canada Stock Advisor Review.July, 2025 Promotion: Save $100
Top Ranking Stock Newsletters based on their last 3 years of stock picks' performance through May 31, 2025 as compared to S&P500. S&P500's return is based on average return of S&P500 from date each stock pick is released. NOTE: To get these results you must buy equal dollar amounts of each pick on the date the stock pick is released. Investor Business Daily Top 50 based on performance of FFTY ETF.