Small cap stock is not a penny stock. Stocks whose market capitalization, that is number of issued shares multiplied by current market value is small are called small cap stocks.

An institutional investor has many ristrictions to invest in a small cap. Even if there is a very good small cap stock, an institution may not be able to buy it for many reasons.

Consider you are buying a company fully. If the market capitalization is small and if you find profits and sales as percentage of it are good, investing in that company will pay if the company grows well in sales and profits in coming years.

ake sure that the company has a good managemnt and pays dividends regularly.