Criteria for microcaps, let me try to summarize a few points:
- Long runway – either under penetrated market or fast growing market, with the company growing faster than the industry.
- Improving margin profile, ROCE and ROE, Stable or Improving Debtor days and Inv days. (In short, improving leverage)
- Growing without need of debt.
- Right capital allocation
- Honest, capable and passionate management – I think this must be given the most importance, to be able to bet big on a stock. Smaller the company, the more important it is, more than the numbers.
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