Welcome, small-cap investors!

Good small companies are out there. But because the vast majority of the 10,000 or so publicly traded companies in the U.S. are considered small by most standards, finding the small-cap jewels of the investing world can take a considerable amount of effort. What is needed is a way to quickly and easily sort through the many small-cap prospects available in order to find the companies that are truly worth investigating as potential investments.

Enter the Foolish 8 small-cap investing system.

The Motley Fool's screening method of choice for finding the good small companies with investment potential is a proprietary system of eight simple quantitative screens called the Foolish 8. The system is based on a combination of business-related and market-related factors that were chosen to highlight eight main fundamental attributes that investors should look for in small companies.

Each month, the Foolish 8 screening system generates a manageable list of small companies that are worthy of further investigation. While it does not produce a list of guaranteed small-cap winners, the Foolish 8 does serve as a useful starting point for further analysis. We'll just emphasize that last bit again -- the Foolish 8 is a useful starting point for further analysis.

For more detail on purchasing the monthly Foolish 8 spreadsheet of stocks, please visit the Foolish 8 area at FoolMart. For more information on what to do with the monthly list of Foolish 8 stocks once it is in your hot, little hands, check out the series of articles below and make sure to read the weekly columns on small-cap investing in the Investing Strategies area at Fool.com.

Fool on!

The Foolish 8 Collection:

  • Small-Cap Investing Philosophy
  • Foolish 8 Criteria Overview
  • Screen 1: Revenues: $500 Million or Less
  • Screen 2: Earnings and Sales Growth: 25% or Greater
  • Screen 3: Net Profit Margin: 7% or Greater
  • Screen 4: Daily Dollar Volume: $1 Million to $25 Million
  • Screen 5: Insider Holdings: 10% or Greater
  • Screen 6: Share Price: $7 or Greater
  • Screen 7: Relative Strength: 90 or Greater
  • Screen 8: Operating Cash Flow: A Positive Number
  • Conclusion: What to Do Next?

    The Foolish 8 spreadsheet at FoolMart

    Small-Cap Philosophy »