Analyzing small caps needs different approach!

Businesses in the small-cap segment are spread across a wide range of categories than large-caps. This means that in analyzing small cap stocks, one has to approach valuations, investment rationales and growth analysis on a company-to-company basis. Avoid using the same set of strategies to analyze businesses belonging to different categories. Avoid stocks that belong to complex and niche categories as understanding the business model, revenue mix and growth prospects in such cases becomes tricky due to the lack of options available for comparison.