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 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 as either an "outperform" or "underperform." In turn, each investor is rated, as is each stock.

The end result is that while only huge companies like General Electric (NYSE:GE) 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.

Drum roll, please ...
So without further ado, here are five CAPS stocks that sport four or five stars, that have market caps between $100 million and $200 million, and that three or fewer professional analysts are covering.


Market Cap (in Millions)

Number of CAPS Ratings


Current Analyst Recommendation

Exactech (NASDAQ:EXAC)




One Strong Buy
One Buy
One Hold





One Strong Buy
Two Holds






MC Shipping (AMEX:MCX)




One Strong Buy
One Buy

USA Technologies (NASDAQ:USAT)





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, let's note that Exactech and USA Technologies might just be a pair of small wonders worthy of your Foolish due diligence.

The replacements
Take a stroll through CAPS, and you'll certainly find no shortage of stock ideas that play on the aging baby boomer demographic, which now accounts for one-third of the U.S. population. But Exactech, a Gainesville, Fla.-based producer of orthopedic implant devices, seems like one of our community's, um, hipper plays.

Over the past five years, Exactech has leveraged the success of various joint-replacement products -- such as its AcuMatch Hip System and Opetrak knee system -- to deliver compounded earnings growth of 17.4%. Not bad, considering some of Exactech's competitors include behemoths such as Johnson & Johnson (NYSE:JNJ) and Stryker. All-Star firm Brean Murray, Carret & Co., whose picks we track on CAPS, isn't perturbed by the competition, either, and has an outperform call on Exactech.

CAPS player BigDMan64 shoulders some of the argument:

Solid historical performance combined with a growth industry, as the baby boomers retire and have more hips, knees, and shoulders replaced. Took a temporary hit with an impairment charge in [the second quarter because of] disruptions with a key supplier, but the company is well positioned [and] has a decent P/E [ratio] and good growth prospects.

USA Technologies is another stock in the long tail that piques the interest of our CAPS players. The Pennsylvania-based company is recognized as a leading provider of wireless networking, asset monitoring, and cashless transactions, but our community knows it as something much simpler: the e-Port people.

The e-Port is the little gadget on various everyday devices -- vending machines, kiosks, laundry machines, and the like -- that conveniently lets us pay with credit cards. USAT has yet to turn a profit, but key relationships with Coca-Cola, PepsiCo, MasterCard, and Sprint have fueled five-year compounded revenue growth of 39%. The stock is up 28% year to date, but with 65 patents granted and 28 pending, this speculative pick might have plenty of pop left in it.

CAPS All-Star Gtrinvestor dramatizes the benefits of USAT's technology with this captivating performance:

Man, do I want a Coke. But the price is $1.25 and I only have a $5 bill and no change. Augh! No wait, what is that black box connected to the vending machine? You mean I can pay with [a] credit card just by swiping it in front of the machine? Thank the benevolent gods for providing such a service (and thank USAT for providing the nascent technology).

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.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Johnson & Johnson is an Income Investor recommendation. Coca-Cola and MasterCard are Inside Value selections. The Fool's disclosure policy is never too small to be seen.