For long-term investors with ability to ignore short-term volatility: 5 small-cap stocks with an upside potential of up to 40%

It is well known that small-cap stocks have a higher element of risk. In fact, this is clearly evident in the way they have moved in the past year. Most have underperformed and are quoting at levels lower than a year back. But here’s another way to look at this: Compare their levels five years ago with today. They are higher today, even after taking into account the corrections of the past year. The bottom line: If you are careful, you can ensure that you get that extra return for the extra risk taken. Now, why are we talking about this at this juncture? After many months of correction, the last three weeks have seen the bulls make a comeback. As market breadth is also better, the probability of things turning better for the mid-cap segment is higher.