A few days ago, Shankar Sharma stunned us by unexpectedly recommending two micro-cap stocks, Kiri Industries and A2Z Infra. To our utter surprise, both stocks surged like rockets and delivered huge gains of 59% and 32% respectively within a period of only 10 days since Shankar’s recommendations.
These stocks not only highlight Shankar’s awesome stock picking abilities but they also underline the huge potential that micro, small and mid-cap stocks offer.
If we get our timing and choice of stocks right, we can effortlessly make a fortune.
For a long time now, Shankar has been an advocate of investing in small-cap stocks. In an interview in January 2016, Shankar explained the rationale for his preference for small and mid-cap stocks. He pointed out that even a 5 percent growth in the GDP is adequate to propel growth in small-caps or mid-caps because these companies derive growth out of very localised markets and can be very regional plays. It is possible for such companies to grow their revenues 40-50 percent, even 100 percent.
“I strongly believe that Indian small and mid-caps remain the single best equity category in the world” Shankar had then said.
Shankar’s theory is supported by a report prepared by Morgan Stanley. Morgan Stanley pointed out that nearly 85 per cent of micro and nano-cap stocks, having less than Rs 265 crore market capitalisation, delivered better returns than the overall market’s returns in the past 10 years.
(Image Credit: Business Standard)
Shankar reiterated this advice in his latest interview.
“Indian small-caps, Indian micro-caps, Indian mid-caps are the single best equity asset class in the world barring none” Shankar asserted, in a confident tone.
Shankar added that his “big call” is that the small-cap stocks would heavily out-perform their large-cap counterparts and deliver gains of up to 300% over the next three years.
Shankar added the caution that the micro, small and mid-cap space is a “minefield” and that even professional investors have to do several months of research to find one good company.
“There are dodgy companies and promoters in that set and even experienced investors and analysts can get conned there” Shankar warned in a grim tone.
Shankar’s proposition makes sense. In fact, it is no coincidence that all of our favourite stock wizards, Dolly Khanna, Vijay Kedia, Ashish Kacholia, Kenneth Andrade etc are already practicing this. Each wizard has made a fortune by homing in on top-quality small-cap and mid-cap stocks.
Now, the all important question is as to which are the small and mid-cap companies that we can consider. This, fortunately for us, is answered by Karvy in its latest research report where it has identified ten top-quality stocks with the potential to give up to 41% return!