Nano-cap stocks, or those with tiny market capitalizations, can offer some of the biggest potential returns in the market. With their tiny size, these little-known companies have ample room to deliver outsized gains. Of course, where there’s great reward, there’s also great risk. No one, not even the shrewdest stock picker, can predict whether a given nano-cap will hit the jackpot or go bust.
The main challenge with assessing nano-caps is their lack of analyst coverage and inconsistent financial reporting. You’re often investing based on limited information, and need to take management at its word. That’s why these stocks are as risky as they are potentially lucrative.
Still, if you have some “fun money” set aside, it could pay to target a few nano-caps with quality underlying businesses and strong growth prospects. Success is never guaranteed. But the rewards of investing in these stocks could be life-changing. That is, if you pick the next big winner before it takes off. Let’s have a look at three nano-cap stocks to buy!
Victory Square Technologies (VSQTF)
Victory Square Technologies (OTCMKTS:VSQTF) is a Vancouver-based private equity and venture capital firm. The company has built an intriguing portfolio of startups and early-stage companies across some of the most exciting tech sectors today. These sectors span blockchain and digital health to Web 3.0, the creator economy, metaverse, machine learning, and climate tech. What I like is that Victory Square doesn’t just provide capital. This company also provides senior leadership and resources to really nurture these young companies and set them up for success.
Now, VSQTF stock has been fairly stagnant over the past couple of years. However, the sectors this company focused on have been absolutely on fire. I suspect that if they can land a few bigger contracts and partnerships, it could be the catalyst that ignites serious growth. Revenue in Q3 2023 was CAD$3.2 million compared to CAD$1.6 million for the same period last year. So, the trend is certainly pointing in the right direction. Moreover, with about CAD$2.4 million in cash, they have some dry powder to keep expanding too.
Victory Square is still a very speculative play. But I believe the upside potential outweighs the risk for investors with a healthy risk appetite.
InsuraGuest Technologies (ISGIF)
Next up is a tiny insurance tech company called InsuraGuest Technologies (OTCMKTS:ISGIF). What caught my attention with this company is their innovative approach to making insurance more customer-centric and hassle-free.
I know insurance isn’t the sexiest industry. But InsuraGuest is doing something unique within the space. And at a market cap below $1 million, the stock is trading for pocket change right now.
Of course, at that valuation, it’s a speculative bet, and you have to be prepared to lose it all if things don’t pan out. But if they can continue expanding their partnerships and gaining traction with consumers, I could see this one surprising to the upside. Revenue increased nicely to $226,162 in Q2 2023 from $171,969 a year earlier. Sure, they’re still operating at a loss, but this loss narrowed to $162,630 from $183,861 in the same period. As long as they keep moving in the right direction, ISGIF stock might be worth a small position for risk-tolerant investors.
Online Vacation Center (ONVC)
Online Vacation Center (OTCMKTS:ONVC) can benefit from remote work becoming mainstream and more people migrating to warmer southern states. The Florida-based cruise retailer looks well-positioned to benefit from the pent-up travel demand. They’ve been in the cruise business for nearly 50 years, so they have the relationships and expertise to secure exclusive deals.
I believe now is an opportune time to bet on a resurgence before the busy summer cruise season. The stock has already started to wake up, rallying 73% over the past year. But at a still-depressed valuation, I think there could be a lot more upside ahead if Online Vacation Center can entice more travelers to set sail. Revenue surged to $14.2 million in 2022 from just $6.4 million the prior year as cruise demand recovered. So, while it’s still a risky nano-cap, I believe the risk/reward is attractive at current levels.
Again, I want to be very clear that these are highly speculative, early-stage companies. Never invest more than you can afford to lose, as the volatility these stocks provide can be extreme, and there’s always a chance these businesses don’t succeed. But if you have some money set aside for high-risk, high-potential opportunities, the potential gains can be very rewarding.
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On the date of publication, Omor Ibne Ehsan did not hold (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.
