A low-cap stock, also known as a small-cap stock, is a type of equity security issued by a company with a relatively small market capitalization. Market capitalization, often abbreviated as "market cap," is a measure of a company's total value in the stock market and is calculated by multiplying the stock's current market price by the total number of outstanding shares. Low-cap stocks typically have a market cap below a certain threshold, which varies but is often considered to be between $300 million to $2 billion, although these boundaries can change over time.

Investing in low-cap stocks can be appealing to some investors due to their growth potential. These smaller companies often have more room for expansion and can experience rapid growth, which can result in substantial returns for investors. However, it's important to note that low-cap stocks also come with higher risks. They may be less stable than larger, more established companies, making them susceptible to market volatility and economic downturns. Additionally, low-cap stocks may have lower trading volumes, which can lead to wider bid-ask spreads and potentially less liquidity, making it more challenging to buy or sell shares at desired prices.

Investors interested in low-cap stocks should conduct thorough research and due diligence to assess the company's financial health, business model, competitive position, and growth prospects. Diversification is also crucial to manage the inherent risks associated with investing in smaller companies. As such, low-cap stocks can be a valuable addition to an investment portfolio but should be approached with careful consideration and a long-term investment horizon.