Small-cap stocks are stocks of companies with relatively small market capitalizations, usually between $300 million to $2 billion. Some investors prefer to invest in small-cap stocks for several reasons.

Firstly, small-cap stocks have the potential to offer higher returns compared to large-cap stocks due to their growth potential. Small-cap companies have more room for growth as they are in their early stages of development, and their stock prices tend to be more volatile, allowing for potentially greater returns.

Secondly, small-cap stocks tend to be less covered by analysts, leaving room for market inefficiencies and potentially underpriced stocks. This provides an opportunity for investors who have done their research to discover undervalued small-cap stocks.

Thirdly, small-cap companies may benefit from changing market conditions or shifts in industry trends, which may provide a boost to their stock prices. In contrast, large-cap stocks may be more affected by overall market trends and economic conditions.

However, investing in small-cap stocks also comes with a higher level of risk due to their volatility and potential lack of liquidity. Therefore, investors must do their research and have a sound investment strategy when investing in small-cap stocks.