Thanks for the welcome, Coppermind.I don't go in for overly deep...

Thanks for the welcome, Coppermind.

I don't go in for overly deep analysis because I've found it unhelpful, because of the things that are hidden in the complexity of companies, and an inability to predict the future - it often does not look the like the past. I firmly believe in the KISS principle

The small cap area is the liars and thieves end of the market and I'm always pretty careful here.

My approach is to go back through the previous couple of years of trading and look for, whether management delivers on its promises and if it is excessively greedy, whether revenue is growing, whether it is close to profitability and its market cap.

For me AL3 ticked all of the above boxes when I bought it (I paid 10c, then sold at 18c and bought back it 15.5c when it was getting dumped after the all time highs - that wasn't really in the plan but I saw an opportunity). So even though I've only been in the stock a couple of weeks my effective buy price is 7.5c, so I've covered my margin of safety which I always like to have in small stocks, and means that the market cap on my buy price is around $20 M. The basic theory is that if the company grows its revenue by 20-30% the stock will be trading at P/E of ten on my entry point and hopefully with growth ahead.

The main thing that I like is that this seems like a niche market that is growing and doesn't have too many competitors.

I am different from most posters here in that I don't focus on big winners, but more on the downside. If I avoid losses I find that things usually turn out pretty well.