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Why don’t Wall Street researchers cover small-cap stocks?

April 26, 2017cover don’t researchers small-cap stocks wall street

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Why don’t Wall Street researchers cover small-cap stocks?

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There are several reasons. For one, the sheer number of small-cap stocks makes it very difficult to find the best ones to cover. For every large-cap stock, there are 15 small-cap stocks. Secondly, the trading commissions on large-cap stocks are higher than on small-cap stocks — diminishing the economic argument for researchers spending time and money on small-cap coverage. Think of Penny Sleuth as your personal researcher, pointing you in the direction of the best small-cap investments.