How to Invest in Smallcap Stocks in 2021 and Beyond

Jan 22, 2021

Editor's Note: Two weeks ago, our smallcap guru, Richa Agarwal, shared her view on how she looks at investing in smallcaps this year. I'm sharing this with you today because Richa is all set to reveal her investing strategy as well as her top 3 small-cap stocks at the Smallcap Revival Summit. Read on...


Richa Agarwal, Research analyst

2020 will perhaps go down as one of the worst years in many decades, perhaps the worst year in this century.

Personally, for me, it was a year of many learnings.

The first was working from home. It was indeed challenging as the working hours kept stretching amid multiple distractions. It indeed took me sometime to get used to it.

I can now say that I have become better at time management.

Not being able to travel to visit managements was one of the biggest setbacks this year. Nonethless, we could overcome this, connecting with them through smartphones and video calls.

I must say that even when the pandemic is over, we will continue to make use of it given how time and cost it saves.

--- Advertisement ---
The Smallcap Fortunes Summit

Join us on the evening of 16th March to learn,

• Why despite rallying over 100% since March-2020 lows... small-cap stocks are set for a massive rally over the coming months and years
• Details of our top 3 stocks to capture potentially huge gains from this upcoming small-cap rally
• And how to spot opportunities, even in the current market, with potential to generate 200%, 400%, and even 900% long-term gains

Plus there is a lot more that we are going to cover.

The summit is free to attend for Equitymaster readers.

But since there are limited seats, we would recommend you to register at the earliest.

Click here to register. It's free
------------------------------

As an analyst, this was a year of validation for me.

You see, smallcaps had been in a downturn since hitting the peak in January 2018. Most of the stocks in this space, including some of our own recommendations, had witnessed crashes to the extent of 60%.

While I had been expecting a rebound since May 2019, the smallcaps continued to underperform with no clear trigger.

In fact, in March 2020, the smallcap index crashed to 8,000 odd levels. We were in an unchartered territory. The rebound seemed like a shifting milestone.

We then tweaked our approach to focus on essential businesses that we were certain would remain relevant and grow stronger when the dust settles.

Since then, we've added our assessment on the resilience, agility, and ability to pivot business models to the changing macro dynamics to our stock selection process. This become a critical aspect of recommending smallcap stocks.

And I'm glad that some of the stocks we recommended under 'essential' theme have already surpassed our expected target prices, within months of recommendation.

Against all odds, the markets have surged. This time, the gains in the smallcap index have outperformed the gains in the Sensex.

Finally, the rebound theme we had been betting on is playing out.

And it just underscores what we have always believed in. With the right process, allocation, and time horizon, smallcaps, despite all their volatility, deserve a place in your portfolio.

So that was 2020.

But what can we expect next?

I believe this rally has a long way to go. I say so not because of the liquidity that is flush in the market.

Learn: How to Potentially Accumulate Rs 7 Crore in Wealth Over the Long-term

I have noticed some interesting trends in the smallcap space. They suggest strengthening fundamentals.

Also, despite the recent surge, on a relative valuation front (as compared to Sensex), smallcaps seem to be a space where you can still buy good stocks where growth meets value.

I am very much excited to share these findings in detail, along with my top stock recommendation for 2021.

Join me at the Smallcap Revival Summit on 28 January and I'll share the details of my top 3 stocks for 2021 and beyond.

Registration for the summit is now open and I'm expecting an attendance in the thousands.

Register for free.

Warm regards,

Richa Agarwal
Richa Agarwal
Editor, Hidden Treasure
Equitymaster Agora Research Private Limited (Research Analyst)

PS: To book you seat for my online Smallcap Revival Summit, please click here.

Recent Articles

Charge Your Portfolio with this Smallcap Proxy Play on India's EV Revolution March 5, 2021
This could be the biggest wealth creator of the decade.
I'm Back to Where It All Started March 4, 2021
Join us in welcoming research analyst, Aditya Vora, to Equitymaster.
Smallcap Investing in the New Normal World March 3, 2021
Here's why I think there is more steam left in smallcaps.
Such China Challenger Stocks are STILL Ignored and Undervalued March 2, 2021
Don't mistake defence stocks to be the only China challengers.

Equitymaster requests your view! Post a comment on "How to Invest in Smallcap Stocks in 2021 and Beyond". Click here!