Bear in mind that shares in small companies are notoriously volatile, and not for the risk-averse. But they are not as well researched as bigger companies, the managements are not well known, and the small investor can still spot growth stocks before they do their growing.
One good place to look is the Alternative Investment Market, the enterprise market set up by the London Stock Exchange almost a year ago. Alternatively, buy into a smaller companies unit or investment trust. But then you don't get to choose your favourite sector.
Despite initial scepticism in some quarters AIM has fared well during its first year of life. It now has 142 companies listed on it with a combined market capitalisation of pounds 3bn.
Andrew Griffiths edits the AIM Newsletter. He believes AIM provides immense opportunity for investment growth for those prepared to take the risks. "You can either lose your trousers or make loads of money," he says.
Celtic Football Club shares are an example of how smaller company shares can vastly outperform those of larger companies. Since the shares joined AIM in late 1995 they have leapt from a price of pounds 66 each to pounds 175 now. And football club shares can be fun to own if you are a football fan, anyway.
Another fun area which has had a good press recently is pubs and themed restaurants. Paul Slattery, an analyst at Kleinwort Benson, says: "Pubs and restaurants have had a strong run, but there are good opportunities left still."
For those who like their beer in traditional, warm surroundings rather than the chrome and neon of some modern pubs, the performance of the Old English Pub Company is cheering. One of the first companies to join the market in June last year at 54p, it now trades at 120p. The company's chief executive spends his time touring the country looking for run-down old pubs with potential. When he finds one he sets out to recreate the old-world atmosphere, with real logs in the fire grate. All serve up large helpings of home-made food. The company currently takes on a couple of pubs a month.
For those looking for a little more from a pub than just somewhere cosy to sit and drink beer, there is Surrey Free Inns. They joined the market at 85p and are now 225p. Based in the South of England the company is setting out to establish a new breed of pub, dubbed the superpub. They come with more space, more food and less music. The company's flagship is The Farmhouse in Portsmouth. As well as being a large pub it has a 73-bedroom hotel, an American themed restaurant and, oddly enough for a pub, sports facilities.
But it's not all necessarily good news among smaller companies. Take the Memory Corporation, which repairs faulty computer memory chips. Its shares had hit a 595p high in late 1995. But then the market for memory chips collapsed and the share price has since fallen to 147p.
Investing in any one company always brings the risk that should that company not perform then you can lose much of your money. A safer way into the AIM market is through AIM-based investment trusts. "This way you don't put all your eggs in one basket," says Mr Griffiths. The only one to invest exclusively in AIM is run by Ivory and Sime Baronsmead. Other smaller companies unit and investment trusts spread their nets a little wider, into the main market as well.
Whispers about a potential bidder are often enough to send smaller share prices up. One such rumour currently doing the rounds concerns Pizza Express. Since flotation in January 1993 the company has hardly put a foot wrong. The word in the City is that with more than 100 outlets around the country the business might be ripe for the managers who own it to cash in their investment by selling to a brewery. Such a deal could see a substantial premium to the current share price of 372p.
And if you want something a little more exotic try La Senza, which retails lingerie on the high street.The company has just raised pounds 20m on AIM to finance the opening of 152 new stores over five years. Issued at 150p the shares are trading at 155p.