Fellow Fool,

If you follow the news, you know that many financial media outlets are saying we’re officially in a “new bull market”…

These sorts of headlines aren’t surprising given the huge recovery we’re seeing in the markets this year.

The NASDAQ is up 31% YTD, and as you can see in the chart below, the S&P 500 is nearly back to its peak in 2021:

Chart refers to U.S. market.

But here’s where things get really interesting for investors like you and I who can look past the headlines pumped out by the folks in the media. Because we’re convinced that the REAL story that’s hidden behind all the noise of this “new bull market” is in the one corner of the market that still has NOT seen a recovery yet… It’s the one corner of the market that it seems like NO ONE is paying any attention to… I’m talking about microcaps. See, the truth is, while many of the media darling large-caps like Apple and Meta have seen meteoric rises this year and helped lift the indexes along with them, microcaps on large have still yet to recover. Look no further than the Russell Microcap Index: It’s STILL down 39% from its peak in 2021!

Chart refers to U.S. market.

In other words, in this cycle…

Microcaps are down over 6x compared to the S&P 500.

So, while many financial media outlets are hyping this so-called new bull market we’re seeing play out, and everyone seems to be chasing the large cap, blue-chip stocks like Apple and Meta that have already seen huge gains… We think THIS massive discrepancy between large caps and microcaps has created a tremendous buying opportunity in the microcap market right now.

Chart refers to U.S. market.

The bottom line is that if you’re a long-term investor seeking maximum returns, there might not be a better opportunity in your lifetime than what we have in front of us right now with these microcap “moonshot” stocks. These are the tiny companies that trade beneath the radar of many of the industry bigwigs on Wall Street and Bay Street… Stocks that offer perhaps the highest risk/reward ratio of ANY other equity class for individual investors… And because of their small size, they’re able to grow in ways that are virtually impossible for large companies. (They’re also stocks that you can often scoop up for pennies on the dollar when there’s a fire sale in the market like there appears to be right now!) With huge stocks like Amazon and Apple and their market caps of $1.4 trillion and $2.7 trillion respectively, you’d be lucky to get a double from here. The days of 10x potential returns from those market behemoths are likely long gone.

Microcaps are different. They allow you to potentially get in as close to the ‘ground floor’ as everyday investors possibly can, before the most explosive growth may occur.

Despite their mouth-watering potential, some investors hate microcaps with a passion… Others are head-over-heels in love with them. Some lose thousands of dollars almost overnight chasing so-called “penny stock pipe dreams”… And others become millionaires in record time by placing smart, calculated bets on up-and-coming dynamos. Whatever your opinion is on microcap stocks, no one can deny the incredible allure that many investors feel for them. We noticed it first-hand on the Stock Advisor Canada forums with threads running rampant with hundreds upon hundreds of posts about one ant-sized company after another. So, in 2021, we officially launched a solution specifically created for microcap investors (more on that in a bit), and we were overwhelmed by the response. We decided we’d implement a firm seat cap and open the doors to 500 investors only. Well, I’m pleased to say that every single spot was taken, and so quickly that we actually had to close the doors earlier than we had planned. To be honest, I can’t say I was all that surprised. Because I think thousands of your fellow members are clamoring after these microcap “moonshot” opportunities for the same reason I’ve personally invested a significant portion of my own portfolio in them. You see, if you’re an investor, you’ve got your head on a swivel for opportunities that will turn $1 into $2, but you’d probably leap right out of your chair at an opportunity to turn $1 into $10. You also know there’s no such thing as a guarantee… But if the risk-reward ratio lines up heavily in your favor, you’re willing to play ball. After all, a homerun gets you a lot farther, a lot faster than a series of bunts. If you’ve been with us here at Motley Fool Canada for a few years, then you know our track record of homeruns firsthand… You were there when we picked Shopify at a split-adjusted $3.46 a share and roughly a $2 billion market cap in March 2016… before it became a global giant and an $95 billion company to boot.

As of August 15, 2023

And you rode shotgun when we alerted members to another e-commerce play in Latin America — MercadoLibre. Since our 2014 recommendation which saw the stock trade for $97.84 a share with a $4.4 billion market cap, members have seen phenomenal returns.

As of August 15, 2023

How about The Trade Desk? We got into that stock fairly early in August 2017, and we’ve seen shares soar from a split-adjusted $5 a share to just north of US$52 when we sold it. In other words, its market cap skyrocketed from $2 billion to over $20 billion by the time we sold it — more than 10x!

As of August 15, 2023

Here’s the thing: Those companies were not always the household names for investors that they are now. In fact, they were once much smaller companies with microscopic market caps compared to their Godzilla-like size today. That’s what got me thinking… See, like I said, we recommended Shopify in 2016 at a split-adjusted $3.46 a share, back when it had a $2.3 billion market cap. All in all, I’d say we got in pretty early, and investors who listened have reaped the rewards with 20X returns. But I still couldn’t help but imagine what would have happened if we were a little bolder… took a little more risk… and we issued a buy alert on it when it was smaller, riskier, and first popped up on our radar at a measly $3.09 a share with a market cap of $1.5 billion. Maybe that seems like a minor difference to you… I know it did to me at first! But instead of the 2,059% return we’re sitting on today… we’d be hovering at a 2,281% return. That’s a +222% beat! In other words, that’s an extra $11,100 of profit for every $5,000 invested.

As of August 15, 2023

Now listen — I’m never going to complain about a +2,059% return… but I’ll also never say no to an additional 222%! If you roll the tape with those other stocks I mentioned, you get shockingly similar results. In fact, in some cases, they’re even more outlandish! Take The Trade Desk. Our August 2017 recommendation at $5 a share and a $2 billion market cap looks pretty good in hindsight… after all, it resulted in a 943% return and over $47,150 of profit for every $5,000 invested. Not too shabby if you ask me! But I still couldn’t help but think about if we’d been bolder… taken a little more risk… if we’d bought it when we first saw the company making waves in late 2016… back when it was significantly smaller and hovering around a $500 million market cap. Our return would’ve looked more like 1,790% — a total profit of roughly $89,500 for every $5,000 invested! In other words, nearly DOUBLE the profit if we’d dove in headfirst less than a year earlier!

As of August 15, 2023

If you ask me, this last example blows them all out of the water. We recommended MercadoLibre in 2014 at $97.84 a share when it sat at a $4.4 billion market cap. Our return since then? 1,214%. Nothing to sneeze at! But if we’d been even more contrarian and taken a swing in 2009 when it was hovering around a $500 million market cap… we’d be sitting on a return of roughly 5,984%! Doing the math, that’s an additional $238,500 of profit for every $5,000 invested!

As of August 15, 2023

Are you seeing the same trend I am? Getting in earlier on some of these first-class companies — sometimes even just a handful of months earlier — can mean the difference between an extra five figures in your portfolio… or an extra six! Practically speaking, that profit differential could mean the difference between having to choose between that cozy cottage you’ve had your eye on or that dream car you’ve been craving… Or simply buying BOTH — in cash I might add! But listen — playing the “what if” game doesn’t add up to real money in your pocket. So, let’s get real. Let’s take a look at what’s happened when we actually HAVE been as bold as we possibly can and recommended stocks before they were even a blip on anyone else’s radar. Because based on data-backed reasons, you’re about to see with your own eyes why…

Microcaps might be the little-known investing strategy for everyday investors to potentially snag themselves a few 10-baggers sooner than later… heck, maybe even a 100-bagger in the years to come!

See, investing in small stocks before they step up to the big leagues is nothing new to The Motley Fool. If you’ve been with us for a little while, you already know we’re huge fans of buying quality businesses before they blow up and become the toast of Wall Street. After all, those are the sort of stock calls that The Motley Fool is famous for in the US, like Amazon (up 18,263%), Netflix (up 22,969%), and NVIDIA (up 26,701%). It’s also exactly why we started our own small-cap investing service right here in Canada in 2018 called Hidden Gems – to find the next Amazons and Netflixes and bring them to our investing community before everyone else has caught on. Typically, these companies range in size of anywhere from $200 million to $4 billion, and our team has had some incredible wins fishing out stocks from this small-cap pond in a short period of time with stocks like ShockWave Medical (sold for a 491% return), Trisura Group (up 157%), Viemed Healthcare (sold for a 185% return), and GameStop (sold for a 710% return). While it goes without saying that not all picks perform THAT well, as you can see, fishing in the small-cap pond has often proved to be highly profitable… and often in short order. In fact, from 1926 through 2016 in the U.S., a model created by University of Chicago professors Eugene Fama (a Nobel Prize winner) and Kenneth French found that small-cap stocks returned 13.1% per year, while large caps returned just 10.2% annually. And while that 2.9 percentage point difference may not seem that significant at first blush, here’s how it looks over time:

Chart refers to US Market.

As you can see, $1,000 invested in small caps would be worth almost $65,000,000 over 90 years — a 10X greater return than that same $1,000 invested in large caps. Now, I don’t think you or I have the patience (or longevity, for that matter!) for a 90-year investment, but it certainly shows the incredible compounding potential of investing in smaller stocks. The thing is, the deeper we dug into the data, the more we started to realize that there might be incredible returns to be had by narrowing our scope even further than just simply looking at small caps. That’s when our attention turned to another class of stocks that might be even more profitable than small caps.

This group of microcap stocks — or “moonshots” as we’ve taken to calling them — is almost completely unknown to most everyday investors. In fact, they get next to ZERO attention on Wall Street or Bay Street either!

Our Motley Fool Canada investing team rarely ventures into this neck of the woods because of higher risk, less liquidity, and quite frankly, never having the right channel to share microcap recommendations with the right group of investors (that’s all changed — more on that in a minute). What we came to realize is that while small-cap stocks have historically outperformed large-cap stocks, microcap stocks might just be the biggest winner of them all. Especially following tough markets like we’ve experienced in the past 12-24 months. See for yourself…

As much as we’ve raved about small caps, the even smaller and often completely ignored microcap stocks not only handily outperformed the midcaps and large-caps stocks, but even the small-cap Russelll 2000 Index. So as profitable as many of The Motley Fool’s small- and large-cap stock picks have been over the years, you can see that…

A potential GOLD MINE could be hiding in plain sight with these microcap stocks!

Now, if you’re a microcap investor, you’re already ahead of the game. Maybe you’ve seen firsthand what a single microcap stock can do for a portfolio. You also probably know that these are often the UNloved, UNDERestimated, UNDERvalued, and often completely UNknown companies. They’re the sort of stocks that Warren Buffett himself, arguably the world’s most successful investor of all time, said he thinks he “could make you 50% a year on $1 million. No, I know I could. I guarantee that.” But here’s a reality check: Warren Buffett can’t invest in these microcap stocks. The fact is, these are the sort of companies that big-time investors like Buffett can’t touch with a ten-foot pole. You see, not only do a lot of these smaller companies have extremely limited trading volume, but even if the institutions were able to buy shares in a meaningful way, the effect of a massive share price increase would barely move the needle. So, despite the incredible amount of research showing that tiny stocks have significantly outperformed larger stocks over the years, it’s not even worth the price of admission for most institutional investors to drop a line in the microcap pond. On the other hand, it can be extremely profitable for everyday investors like you and me to invest in high-quality microcap stocks. So, by now, you might be thinking, “Hey, it looks like all I have to do is buy tiny stocks and I’ll get rich!” Well, hold your horses, because that couldn’t be further from the truth. I can pretty much guarantee that you won’t get market-beating returns by throwing a dart at a board filled with a random assortment of tiny stocks. Let me say with emphasis… Simply investing in tiny stocks is NOT a sure-fire way to 5X… 10X… or 20X your money. The fact of the matter is that last I checked, there are 2,875 small cap and microcap stocks in Canada alone across both the TSX and the TSX Venture Exchange. And the U.S. has a staggering 3,036 public small cap and microcap stocks across its various exchanges. Put the two together, and you’re looking at a total universe of roughly 5,911 companies. But keep in mind, many of those are companies that have remained so small precisely because they have businesses built on a wing and a prayer… Others are so volatile and unpredictable that they’re equally as likely to go bankrupt as they are to be sound, long-term investments… And still others are so tiny that it’s practically impossible to know much of anything about their business at all! Point being, it’s not like you can simply scroll through a list of stocks, look for the ones that happen to be microcaps, and plunk your money into whatever you find. That sounds more like a recipe for lighting good money on fire! You have to know how to find the RIGHT stocks, using the RIGHT strategy and the RIGHT philosophy. Just like we did with larger companies like Shopify… The Trade Desk… MercadoLibre… and the strategy we’re following to a T as we finally turn our sights to microcaps. That’s why I’m incredibly excited to make this announcement:

For just 25 investors only, we’re re-opening the doors to one of our boldest and most exclusive services ever — one that’s 100% focused on primarily Canadian microcap stocks — and we’re bankrolling it with $50,000 of The Motley Fool’s own money! Introducing…

We opened Microcap Mission for the first time in 2021, and we decided we would only accept 500 members at that time.

Well, as I mentioned earlier, all 500 of those spots were taken — fast. In fact, they were taken so quickly that we actually had to close the doors to Microcap Mission sooner than we had planned. Then again last October, we re-opened Microcap Mission to a handful of investors. Again, every spot was taken. So, you can understand why, since we’re only opening 25 spots at this time, I simply can’t guarantee how long they’ll remain available. After all, that means that far less than 1% of the Motley Fool Canada community will be able to join! If you want to skip ahead to make sure you’re able to lock in a spot, you can simply click the button below. Listen — you’ve seen for yourself the sort of wild profits that can come from dipping a toe in the microcap pond, but you’ve also seen the high-level of risk that comes with the territory, with many shares going to zero. Now, exclusively inside Microcap Mission, our Motley Fool Canada team is walking investors through the microcap minefield and shining a spotlight on what we see as diamonds in the rough. What exactly is our mission?

10X returns — NOT altogether average (albeit respectable) 10% gains.

Microcaps headed for the moon — NOT run-of-the-mill “safe” plays.

Diamonds in the rough — NOT penny stock pipe dreams bound to crash and burn.

Will there still be risk? You bet. Will some stocks end up being a dumpster fire? Quite possibly. But that’s the price of admission in the world of microcaps, and we think that the Pareto principle will work its magic in this portfolio like it does in almost every other area of life. The Pareto principle, or 80/20 rule as its also called, essentially states that roughly 80% of results come from 20% of causes. In other words, we think that 80% of our returns will likely come from 20% of the stocks in the Microcap Mission portfolio. Some of these microcaps will fail, but our goal is that others will pick up the slack and then some. You don’t get an omelette without breaking a few eggs, and you don’t get the 10 or 20-baggers of the world without going through a few stinkers along the way. That said, hunting for 10X returns in the world of microcaps is not for the faint of heart. I say all of this to make sure that only battle-tested, experienced investors join us in this venture. But let me be frank with you… I’ve spent a lot of time poring over this new portfolio with my own eyes, and I’m convinced there are more than a few gems with sky-high potential. Especially with the 2 brand-new microcap recommendations that we’re getting ready to release TODAY… in my opinion, these two tiny Canadian companies are legitimate showstoppers. In fact, from my perspective, 10X returns might end up being too low of a bar.

I wouldn’t be surprised if we see Motley Fool Canada’s first 100-bagger come out of this fully loaded Microcap Mission portfolio.

Now, because of just how small these companies are and how few spots we’re making available to investors like yourself, I can’t in good faith reveal any of their names. BUT I can give you a sneak peek at a handful of the recommendations we’ve made recently.

Microcap No. 1: A founder-led fintech company based in Toronto and powered by proprietary AI technology which has led to triple-digit revenue growth this year along with increasing profits. The icing on the cake is that insiders own nearly 50% and the company even pays a ~5% dividend!

Microcap No. 2: A downright boring Canadian manufacturing business that has doubled its top line in the last ten years, continues to pump out cash, and trades at a valuation we think is dirt cheap (that’s not even mentioning the “global shortage” of the product it supplies that is causing revenue and margins to skyrocket!).

Microcap No. 3: A BC-based company with a cutting-edge digital platform that’s quickly disrupting the dinosaurs in its industry. It’s recently become profitable, the revenue growth engine is kicking into high gear, and the CEO has been buying shares hand over foot. He also recently said, “Do I think we can build another $200 million business and sell for more than half a billion? I think we can do that all day long.” That would be more than a 4x return from today’s prices!

I hope I’ve whetted your appetite for what lies within Microcap Mission’s highly exclusive, members-only walls… and let me say, that’s just the tip of the iceberg.

Heck, we bagged a +40% return from one stock (Dialogue Healthcare Technologies) in our last batch of recommendations in just ONE DAY!

But why cherry pick results when I can show you one simple chart that illustrates how effective Microcap Mission has been in its brief 2- year lifespan…

As of 8/8/2023

That’s despite the fact that, as I showed you earlier, the microcap market at large has still yet to rebound as evidenced by the Russell Microcap Index STILL being down a whopping 39% from its 2021 peak! So, listen –if you manage to grab one of the 25 seats we’re making available to Motley Fool Canada members today, you won’t just get a handful of exciting stock ideas… you’ll get a whopping total of 50+ microcap stocks right out of the gate! A portfolio of stocks that have collectively beaten the S&P/TSX Composite Index by more than 2x in one of the most challenging microcap markets in recent memory. These stocks get very little to no attention from mainstream analysts and are flat out ignored by most big-time investing firms. Now, you might be wondering… just how small of stocks are we hunting for? Some of the smallest stocks you’ll find in the entire Motley Fool universe. After all, this is about being bold and hunting for the “moonshot” stocks with blue sky potential. That means we’re going tiny… as in “Honey I Shrunk the Kids” tiny. For Canadian stocks, which will make up roughly 80% of this portfolio, we’ve set a $200 million market cap as our ceiling. Bigger than that? We won’t touch it. For our U.S compatriots, we’ll go as high as $1 billion due to the sheer market size we’re contending with, but we’ll still aim for as small as possible to maximize the potential runway ahead. And remember, we’re putting our money where our mouth is with the stocks we’ll be recommending to members because…

The Microcap Mission portfolio is backed by $50,000 of The Motley Fool’s own capital — $1,000 allocated for each recommendation to start with the potential for adding more cash along the way!

Of course, we always wait to deploy our cash into new stocks until members have had ample opportunity to buy these stocks themselves. We’re member-first here, which means you deserve the most attractive entry point — even if it impacts our own potential returns somewhat. In the long run, we’re not sweating a few percentage points from a late entry point… especially since we’re aiming for 10X returns, not 10%. Now, investing in plain Jane stocks is one thing, but putting your money into microcap “moonshots” is a whole other ballgame. That’s why we’re not just giving members the names of a bunch of microcap stocks right out of the gate and setting them loose in the wild to fend for themselves. Besides thoroughly detailed coverage on each and every stock, we’re ALSO giving members a roadmap straight from our veteran investing team that walks you through exactly how we approach investing in these risky, yet potentially highly profitable stocks.

That includes comprehensive investing guides that will form the bedrock of members’ microcap investing journey, like…

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