Stocks with small share prices are sometimes overlooked, but the wise investor knows to dig a little deeper to find true diamonds in the rough. Considering the following investment candidates could lead to bigger gains tomorrow as real portfolio gems emerge. And you don't even have to get your hands dirty.

This company built a better mousetrap, and you can benefit

Avita Medical (AVMXY), an Australian medical device company specializing in regenerating skin to treat burns and skin trauma, currently trades around $5 per share. Avita's innovation is revolutionizing burn treatment with a medical device that replaces painful skin grafts and speeds patient recovery time.

The medical device is called the RECELL System. It prepares a spray-on suspension using a small amount of a patient's own skin, providing a new way to treat severe burns. Skin regenerates, or grows, wherever the spray has been applied. Previously, skin grafts were the only way to replace skin. This new technology significantly reduces the amount of donor skin required, rate of infection, recovery time, and expense.

Its RECELL device was approved by the U.S. Food and Drug Administration (FDA) in September 2018 and officially launched in January 2019.

The medical community is responding to Avita's better mousetrap. About U.S. adoption, in a December 2019 press release, CEO Mike Perry said, "We have very high interest in the RECELL System, with more than 160 trained burn physicians and 63 accredited burn institutions" using the technology. The company plans to leverage its initial market of 14,000 eligible in-patient burn patients to increase opportunities in soft tissue reconstruction, vitiligo, and genetic errors. 

Growing seedlings atop piles of quarters.

Source: Getty Images

On Jan. 31, the company released second-quarter results for its fiscal 2020 reflecting fast U.S. device adoption in just one year. U.S. product sales leaped to AU$4.7 million from AU$1.1 million in the same quarter a year ago.

The FDA granted approvals for pivotal studies for pediatric scalds, vitiligo, and soft tissue regeneration. The combined market opportunity exceeds $2 billion, according to a March 4 Avita presentation at Cowen's 40th Annual Healthcare Conference.

Investors should seriously consider Avita Medical stock. Outsize returns often follow when healthcare companies invent unique products to solve problems. Improving burn recovery times while incurring less trauma to patients fits that description to a tee.

Dirty work leads to growing profits

Great Lakes Dredge and Dock (GLDD -1.61%), operating since 1890, owns the largest and most diverse fleet in the U.S. dredging industry. The business is a balanced demand of 55% of revenue from recurring maintenance and coastal protection projects, and 45% of revenue from one-time projects of capital improvements and coastal restoration.

The dredging industry is unusual in that the U.S. market is closed to foreign competition. The 1906 Dredge Act and the Jones Act created so many barriers to entry that it became virtually impossible for large foreign dredging firms to participate in the U.S. market. Besides protection from foreign competition, Great Lakes Dredge and Dock should benefit significantly from recent House legislation (HR 2440) that mandates over $9 billion be released during the next 10 years to fund additional port improvements, such as dredging.

Other possible catalysts for the company include the country's needs to upgrade harbor facilities and waterways to accommodate larger international shipping vessels, and offshore energy development needs requiring electric cables and transport pipelines to be trenched in the seabed. 

In 2016, the company overhauled its money-losing environmental and infrastructure division by selling underutilized assets, changing management, and improving bidding. Since turning that division around to profitability, company results have improved every year. In 2019, revenue was $712 million, a 14.7% increase year over year. Gross profit margin increased to 21.6%, compared with 19.4% for the year before. And adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) came in at $136 million, a $26 million increase year over year.

Great Lakes Dredge and Dock currently has a five-year project backlog totaling $589 million, and was just awarded contracts worth $71.6 million.

With its shares trading for less than $7, Great Lakes Dredge and Dock presents a unique opportunity. The company is a solid business, and makes an attractive investment choice for both the near and long term.