The investing world can often seem like a difficult world to break into. Small time investors simply don’t have the capital to buy up shares of Apple or Microsoft. This part of the industry is ruled by large institutional investors and pension funds.
But there is a way for the average joe daytrader to start investing with the potential for big returns: Microcaps.
Microcap companies offer investors the chance to invest where the bigger institutional players don’t usually tread. Often, these companies are so small that they haven’t received analyst or institutional coverage yet. Because of that, bigger investment firms have yet to take an active interest in these stocks.
What Are Microcap Stocks?
Let’s begin by defining what microcap stocks aren’t.
Microcap stocks are not penny stocks. Though you wouldn’t be alone if you were holding this misconception.
In reality, there is a lot of difference between microcap and penny stocks. For one, penny stocks have share prices below $10.00 (that’s low), while microcaps can be any price.
Rather than share price, microcaps are defined by how much a company is worth - its market capitalization (market cap), which is calculated thusly:
Market Cap = Price of One Share × Total Number of Shares
Generally speaking, microcaps are defined as those between $50 and $300 million, though opinions do differ.
Due to their small size, microcap companies tend to rise and fall faster than their large-cap brothers. That, of course, means there is more risk but that can also yield greater opportunity if your risk tolerance is high enough. A look at a micro cap companies list, or a micro stock list, is often a good way to see if you can stomach investing in companies of this size.
For growth investors, these stocks are a way to get in on the ground floor of a company that’s about to blow up. Value investors often enjoy microcaps as well, given that Wall Street analysts ignore these stocks and institutional investors can’t get involved due to size restrictions.
This means that the space is generally less efficient and thus more mispricing of stocks. It’s not unusual to discover a microcap stock that’s trading for half of what it’s actually worth - sometimes less.
To that end, we’ve compiled a micro cap stocks list so you can begin investigating. Once you’ve familiarized yourself with these companies, you may want to look into a microcap stock screener because, after all, a list of micro cap stocks should only serve as the beginning of your investment journey.
1. United States Antimony Corporation (UAMY)
United States Antimony Corporation (USAC), headquartered in Thompson Falls, Montana, is a natural resource company. The company has operated since 1969 as a fully integrating mining, transportation, milling, smelting, and selling company.
USAC is increasing its raw material supply of antimony from properties in Mexico and third parties around the world, according to its website. Indeed, this company operates the only significant antimony smelter in the United States.
Its operations include a smelter and a precious metal refinery in Montana, and a smelter and three mills in Mexico. The Los Juarez property and mill at Puerto Blanco are being permitted to start gold and silver production that will supplement the antimony values and identify the Company as a "precious metal producer," according to USAC.
The company also owns 100 percent of the Bear River Zeolite mine in southeast Idaho which USAC management sees as one of the best zeolite properties in the world.
The company’s stock has traded at a high of $0.59 and a low of $0.22 over the last year. The company’s market cap is $28.46 million, with a float of $68.41 million. As the company increases its operations it could bolster its credibility within the sector, which could lead to more upside in the future.
2. Century Casinos (CNTY)
The pandemic hit casino stocks particularly hard. Even major names like MGM Resorts and Wynn saw major pullbacks as Coronavirus took hold of the country and the globe.
Then, between May and June, many of those stocks began to soar again as lockdown orders were lifted. Then, enthusiasm again slowed as cases began to rise.
But now may be a good time to gamble on the casino industry because people will want to return to the slots once this pandemic is truly over.
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Luckily, those big names mentioned above aren’t the only gaming stocks on the table. Microcaps like CNTY may be a good alternative. The company operates casinos in the United States, Canada, and Europe and its stock has jumped five-times from its previous lows.
In addition to its casinos, the company has a partnership with bet365, showing the company is working to diversify its core business while using its existing expertise. As sports betting is increasingly legalized across the US, this could be another great boon for CNTY’s stock.
Shares are currently trading below $5.40 per share. But given that the stock was trading above $8 pre-COVID, there’s a fair amount of upside left. Casinos face an uncertain future, but given that this stock as trading at higher levels before the lockdown and its working on a sports betting play, there’s a lot of potential for this overlooked stock.
3. Funko (FNKO)
Familiar to nerds and collectors the world over, this company is known for its Funko Pop figurines.
That makes this stock a bit of an outlier on this microcap stock list. Usually, microcaps are lesser-known companies. Businesses that have captured the public imagination usually don’t make there way on to lists like these.
But the pandemic has caused Funk to find itself in the midst of a liquidity crunch. Shutdowns of malls and other shopping centers has had a severe impact on Funko’s sales, coupled with a high debt load and Funko could be headed for bankruptcy if it’s not careful.
But, if we do start to pull out of this pandemic, Funk could see a turnaround which could send its shares higher. Before COVID turned everyone into an agoraphobe, Funko was trading above $15.50 a share. It’s currently sitting around the $6 mark. So there’s a lot of potential upswing for this toy manufacturer.
Funko is reworking its credit agreement, which should help it stave off any Chapter 11 nonsense. And institutional investor Sei Investments Co. recently raised its stake in the company by over 58 percent, signalling confidence in the firm.
We know we said that institutional investors usually avoid microcap companies, but that may be an even better signal that this stock is ready to climb.
4. Solitario Zinc Corp (XPL)
Solitario Zinc is a zinc-focused exploration company that engages in the acquisition, exploration, and development of zing resources in North and South America.
The company has joint venture interests in two large, high-grade zinc projects in Peru and Alaska. Its Florida Canyon Zinc Project is a large-tonnage, high-grade development project, according to the company. Solitario also has additional portfolio properties and royalties spread around the Americas.
Early in October, shares of XPL went up by 41.30 percent from its previous closing price. The company is now commanding a market cap of $34.3 million and a float of $48.6 million.
Shares of the company rose after news that it would present at the H.C. Wainwright & Co. Virtual Global Investment Conference. News like this tends to move stocks higher, but those moves can be indicative that there’s room for the stock to grow in general.
There has also been some notable insider trading activities of late. Not the type of “insider trading” that would have the FBI knocking down your door. This is when executives or other high ranking officials in the company buy up shares of the firm, which can demonstrate confidence in the business model or underlying fundamentals.
Early this year, Solitario’s CEO Christopher Herald purchased 10,000 shares bringing his total owned shares to 1,617,000 according to an SEC filing.
So, there are indications that top brass at the company believe in the business. Maybe that’s a sign that investors should as well.
5. Orbital Energy Group (OEG)
Through its subsidiaries, Orbital Energy Group engages in the design, installation, and the commissioning of industrial gas sampling, measurement, and delivery systems within the United States and the United Kingdom.
The company manufactures and delivers various technologies, including gas metering, gas sampling, process control, environmental monitoring, telemetry, and bio methane monitoring to the power generation, gas utility, emissions, manufacturing, and automotive industries.
The company was founded in 1998 and is headquartered in Tualatin, Oregon.
At the beginning of October, the company’s stock was trading up more than 36 percent. The company’s CFO Daniel N. Ford recently bought 10,000 shares of OEG, signaling a certain amount of confidence in the core business structure of the company.
According to its most recent earnings report, OEG earned a profit of $1.04 million. OEG also saw revenues increase to $7.78 million. OEG has a market cap of $26.98 million and a float of $27.18 million.
Utility stocks like OEG have been gaining traction with investors. In 2019, the sector outperformed the overall market. Generally speaking, utility stocks offer relatively stable earnings thanks to government regulation or contractual guarantees.
That allows these companies to pay dividends with good yields, which means a predictable profitability alongside income generation. So, microcap utility companies like this may be an extra good opportunity for investors looking to get in while the getting is good.
6. Universal Technical Institute (UTI)
It’s starting to look less likely that this pandemic will end before the year is out, causing for recessionary conditions on the market that could linger into 2021.
While that may be the death knell for a number of industries, counter-cyclical stocks could serve to benefit from the economic crunch.
One prime example is Universal Technical Institute, which operates for-profit schools throughout the United States. It’s not unfeasible to imagine that the current high levels of unemployment will eventually translate into an uptick in enrollment at UTI’s schools. Unemployed people are seeking new skills to help them find new jobs. That could mean a big upswing for UTI’s stock, which is currently trading around $8 per share.
UTI offers training in professional automotive, diesel, collision repair, motorcycle, and marine technicians. Blue-collar positions like these are some of the most in-demand jobs on the market at the moment.
The company has a market capitalization of $224 million, placing it well below the radar of most investors. Its small size means that it can suffer a lot of volatility, especially with the market turmoil that we’re currently experiencing. But as the overall economy continues its roughshod ways, counter-cyclical investments such as UTI could offer a lot of potential.
At the end of the day, whether you invest your money in microcap stocks is up to you. This microcap stocks list should just serve as a jumping off point.
Buying shares like these is easy, they’re available on all stock exchanges. But finding the top micro cap stocks takes a lot of due diligence and research to ensure your investment.
A microcap stock list such as this doesn’t contain names that will make headlines and their CEOs aren’t generally offering interviews. That can make the information available rather limited.
But good microcaps should provide the following: Little debt, low trading volumes, few or zero institutional investors, and a relatively simple capital structure. Of course, these types of companies exist at all levels, but their especially prominent within the microcap realm.
You may want to expand your research with a micro cap stock screener, or check out another micro cap stock list to expand upon your research.
Remember, these are not penny stocks. Microcap stocks are a different type of investment entirely. Penny stocks have a low share price while microcap stocks are designated by low market cap.
There’s certainly a high amount of risk when investing in microcap companies, but there is an equally high reward. Happy investing.