Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



The Best Small Cap for 2007

If you believe that markets are inefficient -- as do most of us here at the Fool -- then you can benefit from investing in small-cap stocks. Which stocks do you think the market is more likely to undervalue -- big blue chips like General Electric (NYSE: GE  ) or Wal-Mart (NYSE: WMT  ) that have entire armies of Wall Street analysts watching their every move? Or sleepy, relatively underfollowed small caps like Middleby (Nasdaq: MIDD  ) or SyneronMedical (Nasdaq: ELOS  ) ?

Basic mathematics also favors small-cap stocks. Regardless of how well a top blue chip like Citigroup (NYSE: C  ) -- with its $250 billion market cap -- might perform in a year, it's unlikely (actually, it's utterly impossible) for it to become a 25-bagger over the next five years, as Urban Outfitters (Nasdaq: URBN  ) did from 2000 to 2005.

So if it's high returns you're after, then small caps represent a great opportunity. Alas, the quest for sizable returns usually involves taking on considerable risk. So the small-cap investor should be prepared to devote a lot of time to researching potential stock ideas.

That's where we come in.

With the help of our 15,000-member-strong Motley Fool CAPS community, we're aiming to identify those small-cap stocks that have multibagger potential for the next five years. Our search began by looking for companies with market caps of less than $3 billion that have earned five stars from our CAPS community. We then put together a list of 15 candidates that represent some of the best investment ideas out there.

These lucky few are a diverse group, among them outstanding companies such as medical-products provider Syneron Medical, oven maker and Motley Fool Hidden Gems selection Middleby, and the steadily growing mattress manufacturer Tempur-Pedic (NYSE: TPX  ) .

Below, you'll find an analyst making the case for each of our 15 small-cap stock ideas. If you agree with the analyst, then rate the stock an "outperform" in CAPS. If you disagree, rate it an "underperform." If you like, you can even add your own pitch. The small cap with the most new, net outperform ratings (outperform ratings minus underperform ratings) will win the contest.

By early next week, we'll have declared a winner. To begin the quest for the best small cap of 2007, start reading the analyses below and then click here to join CAPS today.

John Reeves does not own shares in any of the companies mentioned. Wal-Mart is an Inside Value pick. The Fool is investors writing for investors.

Read/Post Comments (0) | Recommend This Article (15)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 518003, ~/Articles/ArticleHandler.aspx, 10/7/2015 4:40:53 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

John Reeves

Editor, Writer, Investor, and Fool.

Today's Market

updated 7 hours ago Sponsored by:
DOW 16,790.19 13.76 0.08%
S&P 500 1,979.92 -7.13 -0.36%
NASD 4,748.36 -32.90 -0.69%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/6/2015 4:01 PM
C $51.06 Down -0.10 -0.20%
Citigroup Inc CAPS Rating: ***
ELOS $7.71 Up +0.22 +2.94%
Syneron Medical CAPS Rating: ***
GE $27.29 Up +0.47 +1.75%
General Electric C… CAPS Rating: ****
MIDD $109.53 Up +0.01 +0.01%
Middleby CAPS Rating: *****
TPX $73.84 Down -0.73 -0.98%
Tempur Sealy Inter… CAPS Rating: ****
URBN $30.58 Down -0.41 -1.32%
Urban Outfitters CAPS Rating: ****
WMT $65.68 Down -0.19 -0.29%
Wal-Mart Stores CAPS Rating: ***