Best Nano Cap Stocks Right Now

Investors who are looking for higher risk and more potential profit often turn to nano-cap stock options. A nano cap stock is a stock with a total market capitalization below $50 million. Though very few nano-cap stocks are headline-breaking household names, they may represent a higher potential for growth when compared to large-cap stocks. Many nano cap stocks are also hot stocks under $5, which make them an appealing choice for day traders and scalpers.

Interested in investing in nano cap stocks but aren’t sure where to start? Our guide to nano-cap stocks will help you get started. We’ll also introduce you to a few nano-cap stocks that investors are eyeing.

Quick Look at the Best Nano-Cap Stocks:

• Virco Manufacturing Corp
• Ever-Glory International Corp., Inc.
• Happiness Biotech Group Ltd
• Orbital Energy Group, Inc.
• Power REIT

Overview: Nano Cap Stocks

A nano cap stock is a stock with a total market capitalization of less than $50 million. You can calculate a company’s market cap by multiplying its current share price by the total number of outstanding shares the company has issued. Nano cap stocks are the smallest stocks by market capitalization.

Nano cap stocks usually represent very small companies and may be riskier investments when compared to large cap and mega cap stocks. Nano stocks are associated with high rates of failure and may be subject to very fast and drastic changes in price. However, nano cap stocks do also offer a number of opportunities not afforded by larger companies. 

Some of the benefits of investing in nano cap stocks include:

• Lower general stock prices: Many nano cap stocks are also considered “penny stocks,” which are low-priced stocks that draw investors with a limited amount of capital. Investing in nano cap stocks can allow you to buy more shares of stock and invest in more companies because most nano cap stocks are also stocks under $20.
• Higher potential for growth: Because nano cap stocks are significantly smaller than mid cap or large cap companies, they have a higher potential to change price quickly. This can produce a larger return on your investment if the company does become profitable.
• More volatility: Nano cap stocks show much larger volatility than larger stocks. While this might not be a positive if you’re a long-term investor, many investors take advantage of this volatility by day trading or scalping nano cap stocks.

Investing in nano cap stocks can be very risky. But if you do your homework and avoid putting all of your financial eggs in one basket, it can also be very rewarding. 

Best Online Brokers for These Stocks

Investing in nano cap stocks (or any type of stocks) begins with finding the right broker and opening an account. If you don’t already have a brokerage account, take a look at a few of our favorites below.  

Features to Look for in Nano Cap Stocks

Nano cap stocks are risky investments, which means that you need to do your due diligence before you invest. Here are a few characteristics to search for when you start investing in nano cap stocks.

• Trades on a major exchange: Stocks listed on major U.S. exchanges (like the NASDAQ and NYSE) must meet certain financial and filing requirements before they can be bought and sold. This makes it significantly more difficult for companies to artificially inflate their stock’s price. To protect your investment, look for nano cap stocks listed on major exchanges.
• Has met or beat consensus EPS estimates: A company’s earnings per share (EPS) value is equal to its current revenue minus dividends divided by the current number of shares outstanding. It's normal for nano cap stocks to have negative EPS values — these stocks are usually offered by companies that aren’t fully established yet. Instead of looking at the EPS alone, look at how the company’s current EPS compares to its “consensus EPS,” experts’ estimations on how the stock should be performing. A stock that consistently meets or beats expectations is a good choice.
• High average trading volume: If you’re a day trader or a trader looking for short-term investments, look for nano cap stocks with a high average daily trading volume. Nano cap stocks with an average daily trading volume of over 100,000 shares will be much more liquid than those with a lower trading volume. 

High Risk, High Reward Potentials

With a wealth of stocks under $10 and limitless potential, investing in nano-cap stocks can be exciting. However, it’s important to remember that nano cap stocks also have significantly higher rates of failure than companies with larger market capitalizations. If you do choose to invest in nano cap stocks, make sure you’re putting your money only into companies that you’ve thoroughly researched — and never invest more than you can afford to lose.