5 Top Micro-Cap Stocks

Hey there, Fools. We're back again to help you identify some of the most attractive micro-cap stocks worthy of your investment dollars. Just as a reminder, we do this because:

• Underfollowed micro-cap companies offer great returns -- and sometimes even the best returns.
• Wall Street is covering fewer stocks than ever before, so this is a great time to start looking for tiny treasures.
• Micro-cap stocks can burn if you don't do your homework, so we try to shed more light on the asset class for you.

Microscopic surgery
This column uses our Motley Fool CAPS community-intelligence database to turn up promising stocks. The system asks amateur and professional investors alike to rate stocks either "outperform" or "underperform." In turn, each investor is rated, as is each stock.

The end result is that while only huge companies such as ExxonMobil (NYSE:XOM) have more than 15 or 20 analysts following them, CAPS harnesses the ideas of thousands to get at the long tail of the stock market with the same depth of coverage.

Drumroll, please ...
So without further ado, here are five CAPS stocks that have a top rating of five stars, market caps between $100 million and $200 million, and that are covered by three or fewer professional analysts.

As always, don't view these stocks as hearty recommendations but rather as appetizing starters for further analysis. Agreed?

Now that that's settled, let's say that Almost Family and ClickSoftware Technologies might just be a pair of small wonders worthy of your Foolish due diligence.

All-in on the family?
On CAPS, you'll find no shortage of ideas that seek to cash in on the country's aging demographic. Almost Family, a Louisville, Ky.-based home health-care provider, is certainly one of the tinier -- and, therefore, more interesting -- ways to play the boomer trend.

Fueled by the strong support of CAPS All-Stars (17 of 18 are bullish), Almost Family recently received its first ever five-star rating. Of course, when you consider the company's year-over-year revenue and earnings growth of 47% and 65%, respectively, it's easy to understand our community's thinking. Additionally, Chairman and CEO William Yarmuth continues to own a nice 11% slice of the company -- another trait we Fools love to see.

With the stock currently trading at an enterprise value-to-EBITDA multiple of less than 10, AFAM might be worth a look.

CAPS player rmenschel penned this bull pitch back in August:

Very good margins, excellent returns, average debt. Sales and profits are growing strongly. Positive cash flow. 25% insider ownership. Very few analysts following, and the majority of those say buy. Just announced record earnings, topping expectations, so may dip down from its recent jump, but IMO a very good long-term investment.

Clicking on CAPS
ClickSoftware Technologies is another stock in the long tail that piques the interest of our community. Like Almost Family, the Israeli maker of business management software has had nice support from CAPS' best players: 81 of the 82 All-Stars who've rated the stock are bullish. Of course, a quick look at the company's strong relationships can shed a bit of light on the outperform case.

Over the years, ClickSoftware has built impressive alliances with customer relationship management vendors such as SAP (NYSE:SAP), as well as system-integration behemoths Accenture (NYSE:ACN) and IBM (NYSE:IBM). I'm no techie, but when a tiny guy like ClickSoftware can augment sales channels by partnering with some of the biggest names in the biz, that's a pretty bullish quality.

The stock isn't cheap, but with the company experiencing strong year-over-year growth in revenues and cash flow, while maintaining a cash-rich (and low debt) balance sheet, CKSW may deserve a place on the watch list.

CAPS player globalX chimes in:

This is a good company, that has increasing earnings with a solid foundation, the customers are pleased and they continue to take market share. Companies are looking to increase employee output and not [waste] time when in the field and cksw is the one to take them where they need to go.

Are we on the same micro-wavelength?
But, of course, the real question is whether you believe these companies are real micro marvels or just shrimps waiting to get squished. Log on to CAPS, and let us know how you feel.

It's absolutely free, and within seconds, you'll have access to thousands of potential stock ideas. Join now -- more teeny-tiny treasures await discovery.