A properly-diversified portfolio requires holding small, mid, and large companies.
Of the top 100 stocks bought by investment clubs using myICLUB.com in the month of January 2023, only five companies had annual revenues less than $1 billion, the cutoff for our definition of a "small" company. Stocks of these companies are often more volatile than large company stocks, but they can offset that volatilty with faster growth and a higher rate of total return, as well as a tendency to perform differently during different periods of broad market cycles. That's why it's a great idea for clubs to maintain a good level of exposure to small company stocks.
Here are the five small company stocks purchased most frequently in the month:
|Ticker||Company||Industry||TTM Sales ($)|
|LTHM||Livent Corp||Specialty Chemicals||420.4|
|INMD||InMode Ltd||Medical Devices||357.6|
|CLFD||Clearfield Inc||Communication Equipment||270.9|
|IIPR||Innovative Industrial Properties Inc||REIT - Industrial||204.6|
|RIVN||Rivian Automotive Inc||Auto Manufacturers||55.0|
It should be noted that Innovative Industrial Properties is a real estate investment trust (REIT), and thus is not recommended to be owned by investing partnerships due to the accounting complications they cause for treasurers at tax time. (Likewise, publicly-traded limited partnerships will frustrate treasurers when they try to prepare their clubs' tax returns, and so should also be avoided.)
Three of these five stocks are recent recommendations of our SmallCap Informer stock newsletter. If you're looking for small company stock ideas for your investment club or personal portfolio, see just how affordable a SmallCap Informer subscription can be.
Click here to see the rest of the current myICLUB.com Top 40.
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