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:
1. Underfollowed micro-cap companies offer great returns -- and sometimes even the best returns.
2. Wall Street is covering fewer stocks than ever before, making now a great time to start looking for tiny treasures.
3. Micro-cap stocks can burn you 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 to outperform or underperform. In turn, each investor is rated, as is each stock.
The end result is that while only huge companies like Google have more than 25 or 30 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 sport a rating of four or five stars (out of five), that have market caps between $100 million and $300 million, and that four or fewer professional analysts are covering.
|
Company
|
Market Cap (in millions)
|
Number of CAPS Ratings
|
Analysts
|
Current Analyst Recommendation
|
|
SkyPeople Fruit Juice (Nasdaq: SPU )
|
$119
|
62
|
One
|
Buy
|
|
HealthTronics (Nasdaq: HTRN )
|
$152
|
99
|
Three
|
Two Strong Buys, One Buy
|
|
GigaMedia
|
$168
|
2,538
|
Two
|
Hold
|
|
Gerber Scientific (NYSE: GRB )
|
$194
|
62
|
Two
|
One Buy, One Hold
|
|
American Dental Partners
|
$223
|
71
|
Three
|
Strong Buy
|
Data from Yahoo! Finance and Motley Fool CAPS.
As always, don't view these stocks as hearty formal recommendations, but rather as appetizing starters for further analysis. Agreed?
Now that we have that settled, SkyPeople and HealthTronics might be a pair of small wonders worthy of your due diligence.
Refreshing opportunity
Hansen Natural (Nasdaq: HANS ) and Jamba Juice (Nasdaq: JMBA ) have been longtime favorite plays on the growing health-drink space, but suddenly, there's a new flavor in town: Each of the 62 members who've rated Chinese juice producer SkyPeople are bullish.
SkyPeople operates the largest kiwi fruit planting base in Asia, and the numbers seem to reflect that scale. Over the past three years, sales and profits have grown at a whopping compounded rate of 50.4% and 58.1%, respectively. The stock has been on fire in 2010, but with a PEG ratio of 0.24, today's buyers aren't exactly paying a premium price for tomorrow's growth.
SkyPeople began trading on the Nasdaq on Tuesday, so that added exposure might serve as yet another catalyst.
"Outstanding growth only now focusing on domestic market. Huge insider ownership. Very strong fundamentals, little debt," Watchdog19 wrote early this month. "86% [quarterly revenue growth] and only a 7 PE? ... I can easily see 20-30% gain in price if next quarter continues this trend."
Healthy selection
HealthTronics is another stock in the long tail that piques the interest of our community. Despite having to battle big boys like Siemens (NYSE: SI ) , the urology services and equipment provider has maintained a five-star ranking for close to two years.
Not surprisingly, Fools like the stock as an obscure play on aging baby boomers. The company has relationships with one-third of all of the nation's urologists, and says it's viewed as "the most influential national player" in the urology services industry. Management expects 2010 earnings per share of $0.25 to $0.30, putting the stock at a reasonable forward P/E under 14.
"HealthTronics provides services and equipment for urology," writes CAPS All-Star MagicDiligence. "Some examples include lithotripsy, a non-invasive technique to break up kidney stones, and also prostate and kidney problems. The company is growing sales at about 10-15%, has a good balance sheet, and a well-respected, young CEO in James Whittenberg."
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 small 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 their discovery.
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