So you’re interested in the best micro-cap stocks to buy now? Congratulations! You may be on the road to sizable tax deductions from severe capital losses. In all seriousness, the U.S. Securities and Exchange Commission would like to have a word with you.
First, let’s talk about definitions. Whether they are the best micro-cap stocks to buy, the worst, or somewhere in the middle, these securities tied to diminutive companies feature incredible risk. The SEC notes that, generally, equities that feature a market capitalization below $250 million to $300 million represent microcaps. Ultimately, it’s a loose definition, but this one works.
Second, this arena presents more opportunities for circumstances going awry. Again, it doesn’t necessarily matter whether ideas command the label of best micro-cap stocks to buy or not. Unfortunately, the smaller profile – with company shares often traded over the counter – enables less-than-honorable activities. That’s according to the SEC, not me.
Still, no one can stop you if you’re committed to gambling some of your funds earmarked for speculation. Below are some of the best micro-cap stocks to buy now. And by “now,” please feel free to think about it.
|UTI||Universal Technical Institute||$5.49|
|SCM||Stellus Capital Investment||$12.05|
|MIGI||Mawson Infrastructure Group||$0.47|
FAT Brands (FAT)
An American multi-brand restaurant operator, FAT Brands (NASDAQ:FAT) arguably garners the most fame (or notoriety, depending on your persuasions) for its Fatburger fast-food joint. In addition, FAT features several other popular franchises, including Johnny Rockets, Buffalo’s World Famous Wings, and Elevation Burger.
Fundamentally, FAT represents one of the best micro-cap stocks to buy for pure cynicism. As health experts broadcast consistently, salt represents a highly addictive taste.
As Healthline.com notes,
Our brains and bodies are designed to enjoy salt because it’s necessary for survival. Over the course of human history, finding salt was difficult, so craving salt was a survival mechanism.
Overeating salt, of course, brings health problems. However, that’s where FAT Brands may rise higher: we’re just so addicted to it.
Still, Gurufocus.com labels FAT as a possible value trap. While FAT’s financials demonstrate that it’s in expansion mode, its net losses also widen. Therefore, only those with solid convictions toward buying the best micro-cap stocks should apply.
One of the benefits of searching for the best micro-cap stocks to buy is that you may be able to find diamonds in the rough. Though no guarantees exist, inTEST (NYSEAMERICAN:INTT) could possibly be the diamond that requires some fine processing.
The company represents a “global supplier of precision-engineered solutions for use in manufacturing and testing across a wide range of markets including automotive, defense/aerospace, energy, industrial, semiconductor, and telecommunications.”
Fundamentally, inTEST could potentially ride coattails off several relevant sectors.
For instance, Russia’s brazen invasion of Ukraine presents a double shot of cynical catalysts. The military conflict itself bolsters inTEST’s revenue channels targeting the defense sector. In addition, the energy industry blossomed as Russia cut critical commodity outflows to Europe.
While even the best micro-cap stocks tend to feature garbage opportunities (I’m just being honest), Gurufocus.com labels INTT as modestly undervalued. Intriguingly, inTEST features decent (though not outstanding) longer-term growth and profitability metrics.
Universal Technical Institute (UTI)
As the name suggests, Universal Technical Institute (NYSE:UTI) represents a leading provider of technical training. Specifically, Universal Technical provides courses to help students get into entry-level positions as technicians in the transportation industry. So, folks looking to build a career as auto or boating mechanics would likely get a step up through its curriculum.
Fundamentally, the beauty of UTI as one of the best micro-cap stocks to buy stems from underlying workforce relevance. As the Biden-Harris administration’s student debt relief plan strongly implies, the broader academic infrastructure pushes kids to higher education. However, the blunt reality is that everyone qualifies for top-level universities or wants to go the white-collar career route.
Indeed, with so many folks pushing into office jobs, blue-collar trades offer excellent opportunities. Very likely, stacking average results between the two workforce segments, the blue-collar may win out, generally speaking. Of course, not counting exceptions like making it as a CEO in a Fortune 500 company.
UTI presents value-trap risks, as Gurufocus.com points out. Still, if you’re patient, it could be one of the best micro-cap stocks to buy.
Marygold Companies (MGLD)
While you can always find unorthodox businesses in every public equity market, Marygold Companies (NYSEAMERICAN:MGLD) presents a unique profile. A global holding company, Marygold’s mission is to “identify and acquire established, profitable, undervalued companies in diverse sectors…” It’s certainly got the diversity thing down.
From food to trading firms to property security, Marygold has you covered. In particular, Marygold appeals to the forward-thinking investor with its Brigadier Security Systems and Gourmet Foods brands. For the former, the rise in global economic uncertainties may spark crimes of desperation, thus necessitating greater security protocols. Regarding the latter, food products represent inelastic demand at the baseline.
Now, for the not-so-pleasant news. Gurufocus.com labels MGLD as a possible value trap. It’s a risky idea because it’s lost about 66% on a year-to-date (or YTD) basis through the Sept. 29 session. But the company does have solid strengths in the balance sheet and decent profitability metrics.
Flux Power (FLUX)
Though highly risky, even with the understood context of the best micro-cap stocks to buy, Flux Power (NASDAQ:FLUX) offers incredible relevance. Per its website, Flux “designs, manufactures, and sells advanced lithium-ion energy storage solutions for a range of industrial and commercial sectors.” This includes “…material handling, airport ground support equipment (GSE), and stationary energy storage.”
Of course, the fundamental reality is that “Lithium-ion battery packs reduce CO2 emissions and help improve sustainability and ESG metrics for fleets.” With the Pew Research Center noting that two-thirds of Americans believe that the government should do more about climate change, Flux Power certainly barks up the right tree.
Still, the narrative of micro-cap stocks to buy is that they often require faith. Gurufocus.com labels FLUX as a possible value trap. Still, in its second quarter of 2022, Flux generated revenue of $15.2 million (up 83% year-over-year) and mitigated net losses.
Stellus Capital Investment (SCM)
With a market cap of almost $234 million, Stellus Capital Investment (NYSE:SCM) represents one of the largest micro-cap stocks to buy on this list. However, that status hasn’t prevented the company from suffering sharply. In the trailing month, SCM shares slipped nearly 12%. Further, with red ink recently dominating the broader equity sphere, SCM could still face more volatility.
Admittedly, Stellus might “deserve” the pain because it’s a hazardous venture. The company works with “…private equity-backed, lower middle market platforms, providing capital to help them grow and succeed,” per its website. The issue here is the Federal Reserve. With the Fed raising rates, borrowing costs inherently rise, putting pressure on commercial expansion.
At the same time, small-to-medium-sized businesses may seek Stellus’ services to provide an alternative to traditional funding mechanisms. Though fundamentally risky, Gurufocus.com labels SCM as modestly undervalued on a financial basis. Also, TipRanks notes that two out of two analysts hold a moderate buy consensus rating on SCM.
Mawson Infrastructure Group (MIGI)
If you’ve noticed a decline in the spam or junk mail urging you to acquire this or that cryptocurrency, it’s because the smelly stuff from the sector hit the proverbial fan. With red ink splashed across virtual currency portfolios everywhere, people simply don’t have the sentiment for cryptos.
Still, understanding how volatile the sector can be on both sides of the parity fence line, digital assets could make a comeback. And that potentially bolsters the highly risky bullish narrative for Mawson Infrastructure Group (NASDAQ:MIGI). According to its website, Mawson provides a “bridge between traditional capital markets and digital assets.”
While an intriguing concept, the main issue is that the company could be incredibly dependent on crypto valuations. Yes, it’s true that for the company’s Q2 2022 earnings report, it posted nearly $20 million in revenue, up 233% from the year-ago quarter. However, with cryptos in red ink on a YTD basis, Mawson could struggle in the coming quarters.
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On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.