There’s a reason why so many investors have micro-cap stocks in their portfolio. When a company has a market capitalization of between $50 million and $300 million, there is inherently more risk involved than with larger companies. However, the potential for growth is higher — at least if you make the right pick.
If you’re looking to add micro-cap stocks to your portfolio, I’m here to help you out. There isn’t always a lot of information available on these companies, which makes research challenging. However, these seven picks show potential.
You also have the re-assurance of knowing they’ve been subject to a Portfolio Grader evaluation. At the time of publication, each of this micro-cap stocks rates an “A” total grade in Portfolio Grader, so you know you can count on it. Most of these stocks are moderately volatile, but I’ve included a few that are best-suited for the more aggressive investors.
- AstroNova (NASDAQ:ALOT)
- Euroseas (NASDAQ:ESEA)
- FAT Brands (NASDAQ:FAT)
- inTEST (NYSEAMERICAN:INTT)
- Iridex (NASDAQ:IRIX)
- Koss (NASDAQ:KOSS)
- Quest Resource Holding Corp (NASDAQ:QRHC)
Micro-Cap Stocks: AstroNova (ALOT)
AstroNova is a data-visualization company. What does that mean, exactly? The company has three primary divisions: Aerospace, Product Identification and Test & Measurement. They sound very different but ultimately they amount to printing information. This includes heavy-duty printers integrated into airplane cockpits to print weather maps and critical flight information, printing product labels, and industrial systems that measure and print real-time data.
We’ve been saying that printing is dead for the past several decades, But no-one seems to want to give up being able to hold a printed sheet that can be annotated, filed for reference, or folded up and carried in a pocket. It’s just too convenient. In its last quarter, AstroNova reported revenue up 8% year-over-year. ALOT stock has delivered a return of 54% so far in 2021 and the company currently has a market capitalization of $120.35 million.
Greece-based container shipping company Euroseas recently made it into my list of triple A-rated stocks to buy in October. It still has the coveted triple-A rating, by the way.
ESEA stock remains a micro-cap, with its current market capitalization of $247.7 million. However, I don’t expect it to stay in this class for much longer. The snarled global supply chain has led to a seemingly bottomless demand for container ships. Euroseas — which has been in the shipping business for over a century — is adding to its fleet to capitalize on the historic demand.
At this point ESEA stock is up 531% for far in 2021, and a whopping 1,191% over the past 12 months. That’s the kind of growth story investors dream about.
Micro-Cap Stocks: FAT Brands (FAT)
The third pick among micro-cap stocks is a bet that the continued pandemic recovery is going to see more consumers heading to restaurants.
FAT Brands owns a wide range of well-known casual and fast-food restaurants and it’s betting on a recovery in the sector. The company has spent much of this year in expansion mode. It acquired Global Franchise Group for $442.5 million, announced a 200 unit expansion into the Middle East, and spent $300 million to buy the Twin Peaks restaurant chain.
Besides Twin Peaks, the fast food chains and food court outlets under the FAT Brands label now includes well-known names such as Fatburger, Johnny Rockets, Great American Cookies, Marble Slab Creamery, Hot Dog on a Stick, Buffalo’s Express, Round Table Pizza and Pretzelmaker.
As of Oct. 1, FAT Brands’ corporate-owned and franchised locations worldwide total over 2,100 with annual sales of approximately $1.8 billion. The market has reacted positively to FAT Brands’ aggressive expansion with FAT stock up 140% so far in 2021. That gives the company a market capitalization of $149.5 million.
Micro-cap stocks don’t rate better in Portfolio Grader than the “A” total grade earned by FAT stock.
New Jersey-based inTEST sells precision-engineered technology used by manufacturers in a wide range of industries including automotive, aerospace and semiconductor manufacturing.
That’s right — a company that stands to benefit as semiconductor makers build out capacity in response to the ongoing global chip shortage. Its solutions are used in the development, qualifying and final testing of integrated circuits and wafers. The growing demand can be seen in inTEST’s latest quarterly earnings. In Q2, the company reported revenue exceeded its guidance, increasing 64% year-over-year.
With INTT stock growth of 89% so far this year, the company’s market cap now stands at $123.25 million.
Micro-Cap Stocks: Iridex (IRIX)
With an aging population, glaucoma (which can cause severe visual impairment) has been on the rise. In addition, the pandemic has resulted is a surge in laser eye surgeries. Some laser eye treatment centers have seen a 50% increase in business since the start of the pandemic.
No-one is sure exactly why, although contact lens fatigue as people avoid wearing glasses that fog up with masks may be part of the story.
It’s a good time to be in the optical laser business. Iridex sells lasers, supplies and related equipment to eye doctors. The company is definitely seeing the impact of the rise in laser eye surgeries. In its latest quarter, Iridex reported revenue up 116% year-over-year. Its gross profit hit a 14-year quarterly high.
IRIX stock has been riding that wave, posting a gain of 298% so far in 2021, bringing the company’s market cap to $$128 million.
I have to come clean about KOSS stock. Back in February, I essentially wrote KOSS off as a meme stock that was bound to come crashing to Earth.
Turns out I was wrong. I stand by the proclamation that KOSS is a meme stock. If it weren’t for Reddit’s r/WallStreetBets we wouldn’t be paying any attention to Koss, a headphone maker that had its brief time in the spotlight decades ago.
However, KOSS has defied the sceptics — myself included — and actually increased further in value since I wrote about it in February. It’s still a more volatile pick than other micro-cap stocks on this list, but with 415% growth since the start of the year, KOSS may just grow its $138.26 market cap further.
Micro-Cap Stocks: Quest Resource Holding Group (QRHC)
They say that the two things you can count on are death and taxes. I would add garbage to that list. Quest Resource Holding Group is a national leader in waste and recycling services. Its Quest Resource Management works with other companies to help them achieve zero waste goals, including landfill diversion goals.
QRHC stock is up 131% in 2021 and its market cap has now reached $107.35 million. With the current raised profile of environmental sustainability, expect QRHC to have plenty of upside going forward.
On the date of publication, Louis Navellier had a long position in ESEA and INTT. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
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