3 Top Small-Cap Stocks to Buy in August
Small-cap stocks, or those with a market cap of between $300 million and $2 billion, often get a bad rap on Wall Street. Smaller companies are typically viewed as having untested business models, therefore quite a few investors believe small-cap stocks to be more prone to volatility and losses. But small-cap stocks can also offer the most robust long-term gains if investors choose the right stocks to invest in.
According to Ibbotson Associates, which publishes its Stocks, Bonds, Bills, and Inflation Yearbook annually, small-cap stocks outperformed large-cap stocks by an annual average of 2.3 percentage points between 1926 and 2006. This isn't a small sample size -- we're talking about eight full decades here. Over a 30-year period, small caps would nearly double the return of the broad-based S&P 500 based on this recorded annual outperformance.
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Source: Fool.com
