Small caps, especially those with low volume and little institutional ownership, are particularly susceptible to manipulators who can swing the stock with very little money. The only thing worse than watching your pet stock plummet is discovering that there's no one to dump it on. Buyers for small stocks evaporate in the face of bad news, and you can easily be left riding your pick into the ground. Finding raw data on these companies can be a challenge. Get the annual reports directly from the company's investor-relations guy, and don't be shy about asking to speak to officers directly.
Access is often surprisingly good.
But when coverage is initiated on, say, Starbucks at 6.50, there's a fortune to be had. Discovering a company that no one knows about and riding it to prominence is not only profitable, it's thrilling, in exactly the same way that discovering a band before it becomes well-known gives you that sense of founder's pride. Both of these telecom microcaps are in a sector that's growing extremely quickly in markets all over the world and shows no sign of relenting. Both feature the usual pitfalls associated with small caps, including those detailed above. Both have shallow pockets and microscopic revenues.