Our Favorite Small-Cap Stock

Before you go, we thought you'd like these...
Before you go close icon

The following video is part of our "Motley Fool Conversations" series, in which analyst John Reeves and advisor David Meier discuss topics across the investing world.

Blogger and Princeton student Evan Soltas made an interesting observation that innovative, nimble, capital-light companies have been able to get to scale faster with fewer employees. There are a few things that investors can take away from this insight. First, our digital world has changed the way companies operate. And second, identifying promising young companies today can have a big payoff tomorrow. David thinks this makes a strong case for disruptive companies like networking equipment maker Infinera. It took on the big boys as a tiny company, has made lots of progress, and is about to make lots more. There's are lots of other examples, too. Westport Innovations in transportation. LinkedIn in career management. Look at what Chipotle did in the restaurant business! David's favorite small-cap company right now has all the key elements of a transformational company. The MEMS designer is innovative as it created a new, smaller form factor for its devices. It's nimble as it has been putting money back into R&D to go after new markets. And it has a capital-light business model that brings in tons of cash. Best of all, it's definitely a buy at today's prices.

Small-cap stocks have traditionally provided outstanding returns to long-term investors. Motley Fool co-founder David Gardner recently identified a small-cap health-care company that he believes is poised for monster returns. To uncover this top pick today, enjoy the special free report "Discover the Next Rule-Breaking Multibagger." Don't miss out on this limited-time offer and your opportunity to discover this game-changing company before the market does. Click here to access your report -- it's totally free.

At the time this article was published David Meierowns shares of Infinera and InvenSense. John Reeves owns shares of Chipotle Mexican Grill. The Motley Fool owns shares of Chipotle Mexican Grill, Infinera , InvenSense, LinkedIn, and Westport Innovations. Motley Fool newsletter services recommend Chipotle Mexican Grill, Infinera , LinkedIn, and Westport Innovations. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners