Continuing with our investing series, we felt it a good idea to look into small cap shares. The small cap market isn’t something that gets talked about as much as the big companies, but they can still offer traders an amazing amount of value.
If you’re out of the loop, “small cap” refers generally to companies that have less than about 2 billion pounds in terms of market capitalization. This is where a company’s shares are multiplied by their value. So a company trading at 100 pounds with 15 million shares outstanding would have a market capitalization of 1.5 billion pounds. This is definitely where we want to focus our attention.
Company size is important because it allows us to look at diversification in a completely different light. You might want to mix things up and have different company sizes so that you’re not completely stuck with a lot of big businesses that you can’t really move around as you would like.
So, where should you look within small caps? Definitely at the oil and gas sector. According to the popular trends of investing in the greater financial media world, oil and gas is definitely on the way up. The FTSE AIM 100 is rising, taking only minor downswings before shooting back up again.
Of course, you want to make sure that you’re still doing all of the normal research. The last thing that you really want to do is get sidetracked, or lulled into just going along with the crowd. While trends can be profitable, they can also be a disaster if you haven’t done much research at all.
What’s gotten the oil and gas sector excited, from a UK perspective? More oil being found. This time it’s being discovered deep within the Barryroe oil field. This is in the Celtic Sea, right off the Cork coast. Ireland’s offshore oil potential isn’t exactly shattering news, but the prospect of more production is definitely getting people talking.
The firm to follow most would be Providence Resources, as they are leading the way in discovering this expanded production potential. However, they aren’t the only company to look at — Fastnet is definitely on the way up.
Looking for oil and gas is a field that’s fraught with its own perils and risks. You’re going to need to make sure that you focus on getting in with companies that really are on the move. Following oil and gas news as time passes wouldn’t be a bad idea either. If you’re really going to get involved in a specific sector, it’s up to you to do as much research as you possibly can. So far though? We’re kind of excited. Check it out for yourself today.
