Foolish Small Cap 8 Screen
|Foolish Small Cap 8||S&P 500|
|Five Year Return:||4.4%||11.9%|
|Ten Year Return:||4%||6.1%|
Stock screening allows you to winnow the universe of companies down to a more manageable group that you can then analyze more closely. How can you screen for small caps?
One method was derived by David and Tom Gardner, founders of the Motley Fool. The methodology—the Foolish 8 small-cap investing system—looks for profitable and rapidly growing small companies with strong price momentum.
The attraction of small caps is their potential to become large companies, with their share price growing in the process. However, the risks—the greatest of which is that they fail—eliminate them from consideration by many individual investors.
Small-cap companies also do not garner the attention of the financial media or analysts that larger firms do. However, the small-cap Foolish 8 strategy is partly based upon the premise that the lack of coverage and interest in small-cap companies presents a better opportunity to locate undiscovered, attractive investment candidates.
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