When it comes to smallcaps there is an interesting equation between desire and challenge. When the desire to own smallcaps is highest, challenges are also highest & vice-versa. Given the recent performance of smallcaps, the desire to own is highest but biggest challenge is to find good quality smallcaps with not-so-outlandish valuations. This is exactly opposite of what the situation was in last quarter of 2022, when valuations were not that expensive but there was hardly any clamour of buying into smallcaps. The reason why it is important to get the right smallcap is because only then return on higher and commensurate with the risks an investor is taking. ET screener powered by Refinitiv’s Stock Report Plus lists down stocks from smallcap space with high upside potential over the next 12 months, having an average recommendation rating of “Buy” or "Strong Buy" and also meeting some parameters like net margins and return on equity.
