How to Invest in Small Companies

Julie Stralow at Morningstar wrote an interesting article last week on how to invest in small companies. She notes that small companies often grow faster than large companies, and that by virtue of their size, small companies are often not as followed by analysts, leading to information gaps and mispricing. The difficulty with investing in small companies is the potential for increased risk. It is also difficult to identify small companies with sustainable competitive advantages.

Julie notes four small cap stocks that are both attractively priced and that she believe have sustainable competitive advantages (i.e. wide moats). Her list is as follows:

  • DeVry (DV)
  • Federated Investor (FII)
  • Foward Air (FWRD)
  • Strayer University (STRA)

I hope to find some time this week to take a closer look at these four attractive stocks.

3 thoughts on “How to Invest in Small Companies

  • May 18, 2007 at 9:37 am

    hi george,

    Can a non-american resident take part in private transactions of US companies?

  • May 15, 2008 at 12:33 am

    I am a private investor based in the United Kingdom. I focus on seed capital, early-stage, start-up, ventures, LLC and all round completion and expansion of investment projects that need funding. I am interested to invest in your company on a long-term business relationship. If this is alright with you kindly get back to me with more details about your company.

    Dr. Frank Morgan.
    (Individual/Angel investor)

  • March 10, 2009 at 9:33 am

    Dear DR Morgan,

    I have a medium size injection moulding and toolmaking company in South Africa,we do a lot of new projects for telecoms ect.
    Personally i have 30 years experience in toolmaking/Injection moulding, we will gladly work with somebody who are interested in investing in our company.
    We have full 3d desighn facilitys as well as we do full turnkey projects from concept,desighn to complete moulded project.

    If you want to contact me my e-mail is

    My Kindest Regards


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