The common theme in investing is more risk, more reward. Fixed-income investments, like bonds and certificates of deposit (CDs), can provide guaranteed returns, but they're extremely low. Stocks can provide virtually unlimited return potential, but there's always a chance you could lose money.

The same risk-reward trade-off applies to different types of stocks, as well. The bigger the company, the more stable it likely is because of the resources that generally come with more size. But that usually reduces the chance for exponential growth.

Small-cap companies have a market capitalization between roughly $300 million and $2 billion. Because of their small size, they have a chance for hypergrowth, providing great returns to their investors along the way. However, with this chance for hypergrowth comes more risk because small-cap stocks are more prone to volatility and may not have as many resources as large-cap companies to weather bad economic storms.

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Source Fool.com