Whether your portfolio is conservatively positioned in blue-chip stocks or more aggressively positioned in emerging stocks, allocating a small portion of your overall portfolio to small and micro-cap stocks can make a lot of sense to help supercharge your portfolio's performance.
The whole idea of owning a portfolio of stocks is to create a level of diversification which reduces your risk. There are lots of ways to approach diversification; one way which can help is to divide your portfolio up into large, mid, small and micro-cap stocks. Of course most investors would allocate a significantly larger percentage of total funds to the big-cap portion, over the small-cap portion.
Here are four stocks spread across the range of capitalisations that could offer growth to help supercharge your portfolio.
AMP Limited (ASX: AMP) has a market capitalisation of $17 billion so it certainly classifies as large-cap. The insurer and wealth manager recently announced an exciting deal with a Chinese company which has the potential in time to turn AMP into a major player in China's wealth management market. Given AMP has limited growth options domestically, the potential for a major business line in China offers a potentially exciting new earnings stream.
Super Retail Group Ltd (ASX: SUL) sits firmly in the mid-cap space with a market capitalisation of $1.4 billion. Recent data suggests the consumer discretionary industry may be experiencing a slight uptick in activity which might be all that is required to get the share prices of a number of retailers trending higher. Super Retail owns a number of leading retail brands including Amart Sports and Rays Outdoors, with its share price down around 50% from its highs, the stock could be one to watch.
Shine Corporate Ltd (ASX: SHJ) has a market capitalisation approaching $500 million which puts it in the mid-to-small cap range. Shine is a leading provider of legal services and is expected to grow through consolidation of the industry as its larger listed peer Slater & Gordon Limited (ASX: SGH) (which has a market capitalisation of $1.3 billion) has done.
Leaf Resources Ltd (ASX: LER) has a market capitalisation of just $22 million making it well-and-truly a micro-cap but as they say, from little things big things grow! Leaf Resources produces cellulose – a key building block with many applications – in an environmentally friendly, sustainable and cost-effective way. For example, cellulose can act as a replacement to petroleum-based additives to plastic bottles thereby eliminating a fossil fuel as an ingredient while also making the plastic bottle biodegradable.
