In this article, we will take a look at the 10 best micro-cap stocks to invest in.
As the economy comes back to normal, investors are beginning to pay attention to small companies that are operating in high-growth sectors. Micro-cap stocks — companies with market caps between $50 million to $300 million — are on investors’ radar as they offer promising returns as compared to big stocks that have already matured.
The larger potential for benefit in micro-cap is often debated and has been studied heavily by researchers. Micro-cap companies in Canada, the United States, and other developed markets, according to Foerster et al, have relatively high returns and low correlations to large-cap stocks, offering diversification benefits in addition to outperformance. However, what leaves most investors baffled is the emergence of bubble stocks, that rise exponentially overnight due to popularity on social media forums.
Investors often use popular forums like Reddit to discuss investment prospects. Reddit threads are filled with discussions regarding best micro-caps to invest in. Apart from this, they are also bursting with mentions of expensive firms like Apple Inc. (NASDAQ: APPL), Tesla Inc. (NASDAQ: TSLA), Uber Technologies, Inc. (NYSE: UBER), Amazon.com, Inc. (NASDAQ: AMZN) and NVIDIA Corporation (NASDAQ: NVDA), among others.
Our Methodology
To identify 10 best micro-cap stocks to invest in, we carried out an extensive search of Insider Monkey’s hedge fund database. From our database of 876 hedge funds, we have identified 10 best micro-cap stocks to invest in. We also looked at the stocks’ long-term growth prospects, analyst ratings, and fundamentals. The idea behind this article is to offer interesting stock ideas for beginner investors who cannot afford to buy big names like Apple Inc. (NASDAQ: APPL), Tesla Inc. (NASDAQ: TSLA), Uber Technologies, Inc. (NYSE: UBER), Amazon.com, Inc. (NASDAQ: AMZN) and NVIDIA Corporation (NASDAQ: NVDA).
Why should we pay attention to hedge fund sentiment while choosing stocks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
With this context in mind, let’s now discuss our list of the 10 best micro-cap stocks to invest in.
10 Best Micro-cap Stocks to Invest In
10. Cyberlux Corporation (OTC:CYBL)
No of Hedge Funds Holders: N/A
Cyberlux Corporation (OTC: CYBL) is a company that provides lighting solutions to commercial, military and government organizations. This company stands tenth on our list of best micro-cap stocks to invest in.
At the end of the second quarter Cyberlux Corporation (OTC: CYBL) earned $591,868 in income from operations. Operating expenses were $153,681 in the second quarter of 2021, compared to $17,887 in the same period the previous year.
The company is operating in high-growth areas, with products that have a rising demand. It makes battery- and solar-powered advanced LED lighting systems for the U.S. Air Force, National Guard, Special Operations Command (SOCOM), and the U.S. Army. It also makes solar-powered charging stations.
9. INmune Bio, Inc. (NASDAQ:INMB)
No. of Hedge Funds Holders: 2
INmune Bio Inc. (NASDAQ: INMB) is a clinical-stage immuno-oncology business that aims to use the immune system of a patient to cure cancer. The company’s main product, INKmune, primes patient’s natural killer cells to cure cancer. This company stands ninth on our list of best micro-cap stocks to invest in.
On August 25, INmune Bio Inc. (NASDAQ: INMB) announced that the first patient who received INKmune, the company’s lead product to kill cancer cells, as a potential treatment for high-risk myelodysplastic syndrome demonstrated NK (natural killer cells) activation and functional differentiation.
On September 7, investment advisory B. Riley kept a Buy rating on INmune Bio Inc. (NASDAQ: INMB) stock and increased the price target from to $32 from $26, appreciating the release of two datasets from the company’s lead programs.
For the second quarter which ended on June 30, 2021, the net loss attributable to common stockholders was about $6.7 million, compared to $2.1 million for the same period in the previous year. INmune Bio Inc. (NASDAQ: INMB) reported $4.5 million in research and development expenses at the end of the second quarter of 2021, compared to roughly $0.9 million for the same quarter last year. The company had approximately $39.5 million in cash and cash equivalents at the end of the second quarter.
Our data shows that Neil Shahrestani’s Ikarian Capital is one of the biggest stakeholders of INmune Bio Inc. (NASDAQ: INMB), with 146,883 shares worth $2.5 million.
At the end of the second quarter of 2021, 2 hedge funds in the database of Insider Monkey held stakes worth $3.6 million in INmune Bio Inc. (NASDAQ: INMB).
8. Citius Pharmaceuticals, Inc. (NASDAQ:CTXR)
No of Hedge Funds Holders:3
Citius Pharmaceuticals is a specialized pharmaceutical business focused on therapeutic product research and commercialization. This company stands eighth on our list of best micro-cap stocks to invest in.
On June 7, Citius Pharmaceuticals, Inc. (NASDAQ: CTXR) reported that at the conclusion of the Russell US Indexes yearly reconstitution, the company will be included to the Russell 2000 Index.
On June 1, Citius Pharmaceuticals announced it has received approval to continue the Mino-Lok trial from the independent Data Monitoring Committee. The company is hopeful to achieve the primary endpoint.
Our data shows that Renaissance Technologies is one of the biggest stakeholders of Citius Pharmaceuticals, Inc. (NASDAQ: CTXR) with 1.9 million shares worth $6.6 million.
At the end of the second quarter of 2021, 3 hedge funds in the database of Insider Monkey held stakes worth $7.5 million in Citius Pharmaceuticals, Inc. (NASDAQ: CTXR), down from 5 the preceding quarter worth $2.8 million.
Just like Apple Inc. (NASDAQ: APPL), Tesla, Inc. (NASDAQ: TSLA), Uber Technologies, Inc. (NYSE: UBER), Amazon.com, Inc. (NASDAQ: AMZN) and NVIDIA Corporation (NASDAQ: NVDA), Citius Pharmaceuticals, Inc. (NASDAQ: CTXR) is attracting investor attention in 2021.
7. Sypris Solutions, Inc. (NASDAQ:SYPR)
No of Hedge Funds Holders: 3
Sypris Solutions, Inc. (NASDAQ: SYPR) manufactures truck parts, oil and gas pipeline parts, and aerospace and defense electronics. This company stands seventh on our list of best micro-cap stocks to invest in.
On March 22, Sypris Electronics, a subsidiary of Sypris Solutions, Inc. (Sypris), reported that it has received a follow-on grant from a US Department of Defense prime contractor to build and test electronic assemblies for a government spacecraft program.
On June 21, Sypris Technologies, a subsidiary of Sypris Solutions, Inc. (Sypris), announced that it has received orders for two large LNG projects. Both projects are expected to be operational by 2024.
Sypris Solutions, Inc. (NASDAQ: SYPR) reported revenue of $26.0 million in the second quarter of 2021, up from $17.2 million for the same quarter previous year. The company announced a net profit of $3.8 million, or $0.17 per diluted share, for the second quarter of 2021, compared to a net loss of $0.3 million, or $0.02 per share, in the prior-year period.
Our data shows that Renaissance Technologies is one of the biggest stakeholders of Sypris Solutions, Inc. (NASDAQ: SYPR), with 941,954 shares worth $3.5 million.
At the end of the second quarter of 2021, 3 hedge funds in the database of Insider Monkey held stakes worth $3.6 million in Sypris Solutions, Inc. (NASDAQ: SYPR), same as the preceding quarter worth $3.4 million.
Just like Apple Inc. (NASDAQ: APPL), Tesla, Inc. (NASDAQ: TSLA), Uber Technologies, Inc. (NYSE: UBER), Amazon.com, Inc. (NASDAQ: AMZN) and NVIDIA Corporation (NASDAQ: NVDA), Sypris Solutions, Inc. (NASDAQ: SYPR) is attracting investor attention.
6. Aqua Metals, Inc. (NASDAQ:AQMS)
No. of Hedge Funds Holders: 4
Aqua Metals, Inc. (NASDAQ: AQMS) recycles lead using a process it created called AquaRefining. This method that the company developed focuses on the recycling of lead acid batteries as well as the manufacturing of lead. The company stands sixth on our list of best micro-cap stocks to invest in.
On August 3, Aqua Metals, Inc. (NASDAQ: AQMS) announced that its V1.5 Aqualyzer programme is now complete. This latest Aqualyzer configuration is capable of producing more lead than the V1.0 Aqualyzer used in the AquaRefinery by more than 300%.
On July 29, Aqua Metals, Inc. (NASDAQ: AQMS) signed a conclusive deal with ACME Metal Enterprise to install and license AquaRefining equipment at its Keelung, Taiwan factory.
Aqua Metals, Inc. (NASDAQ: AQMS) recently finalized a binding deal with ACME Metal Enterprise Co. in Taiwan to deploy and license AquaRefining technology. The cost of product sales grew by around 64% to $2.1 million in Q2 2021 as compared to $1.3 million for the same period in the previous year. The company reported an operating loss of $4.4 million in Q2 2021, compared to $3.8 million in the second quarter of 2020.
Our data shows that Millennium Management is one of the biggest stakeholders of Aqua Metals, Inc. (NASDAQ: AQMS), with 478,910 shares worth $1.4 million.
At the end of the second quarter of 2021, 4 hedge funds in the database of Insider Monkey held stakes worth $2.1 million in Aqua Metals, Inc. (NASDAQ: AQMS).
5. Zynex, Inc. (NASDAQ:ZYXI)
No of Hedge Funds Holders: 7
Zynex, Inc. (NASDAQ: ZYXI) is a medical technology firm that focuses on the development and distribution of non-invasive medical devices for pain treatment, cardiac monitoring, stroke rehabilitation and neurological diagnostics. This company stands fifth on our list of best micro-cap stocks to invest in.
In the second quarter of 2021 Zynex, Inc. (NASDAQ: ZYXI) reported an EPS of $0.08, beating estimates by $0.01.
On July 16, investment advisory B. Riley upgraded Zynex, Inc. (NASDAQ: ZYXI) stock to Buy from Neutral and increased the price target to $19.5 from $19, appreciating the company’s improved profitability.
Zynex, Inc. (NASDAQ: ZYXI) recorded net revenue of $31.0 million in the second quarter, up 61% from the second quarter of 2020. Similarly, gross margins were 77%, while net income was $2.8 million. The company had $52.9 million in working capital at the end of the second quarter of 2021.
Our data shows that Citadel Investment Group is one the biggest stakeholders of Zynex, Inc. (NASDAQ: ZYXI) with 75,769 shares worth $1.2 million.
At the end of the second quarter of 2021, 7 hedge funds in the database of Insider Monkey held stakes worth $2.8 million in Zynex, Inc. (NASDAQ: ZYXI), down from 6 the preceding quarter worth $8.1 million.
4. SilverBow Resources, Inc. (NYSE:SBOW)
No of Hedge Funds Holders:11
SilverBow Resources, Inc. (NYSE: SBOW) is a leading independent oil and natural gas exploration and production business based in Houston, Texas. This company stands fourth on our list of best micro-cap stocks to invest in.
On September 9, investment advisory Truist upgraded SilverBow Resources, Inc. (NYSE: SBOW) stock to Buy from Hold rating with increase in price target from $30 to $22, appreciating the future growth of the company.
According to Aron chow, lead researcher at Elephant Analytics, with the strength in natural gas prices good cash flow performance is expected by SilverBow Resources, Inc. (NYSE: SBOW). The company is expected to generate positive cash flow of more than $70 million in 2021 and over $80 million in 2022 at current strip.
Our data shows that Strategic Value Partners is one of the biggest stakeholders of SilverBow Resources, Inc. (NYSE: SBOW) with 4.5 million shares worth $103.9 million.
At the end of the second quarter of 2021, 11 hedge funds in the database of Insider Monkey held stakes worth $118.9 million in SilverBow Resources, Inc. (NYSE: SBOW), up from 4 the preceding quarter worth $36.8 million.
3. Cabaletta Bio, Inc. (NASDAQ:CABA)
No of Hedge Funds Holders: 12
Cabaletta Bio, Inc. (NASDAQ: CABA) is a biotechnology firm focused on the development of cellular treatments for autoimmune illnesses. This company stands third on our list of best micro-cap stocks to invest in.
On June 29, investment advisory Mizuho initiated coverage of Cabaletta Bio, Inc. (NASDAQ: CABA) stock with a Buy rating and a price target of $22, stating that it believes that the company would bring transformative innovation into immunology.
On May 3, the results of the first cohort of three patients treated with DSG3-CAART were released by the Cabaletta Bio, Inc. (NASDAQ: CABA), citing that there were no significant side effects.
Our data shows that Adage Capital Management is one of the biggest stakeholders of Cabaletta Bio, Inc. (NASDAQ: CABA) with 3 million shares worth $26.2 million.
At the end of the second quarter of 2021, 12 hedge funds in the database of Insider Monkey held stakes worth $73.1 million in Cabaletta Bio, Inc. (NASDAQ: CABA), up from 11 the preceding quarter worth $91.8 million.
2. Fluidigm Corporation (NASDAQ:FLDM)
No of Hedge Funds Holders: 15
Fluidigm Corporation (NASDAQ: FLDM) is an American public firm that designs, manufactures, and sells biological research equipment using integrated fluidic circuit technology. It stands second on our list of best micro-cap stocks to invest in.
On August 5, a research organization ImaBiotech and Fluidigm Corporation (NASDAQ: FLDM) announced a collaboration and co-marketing agreement for service offerings and product development for Imaging Mass Cytometry, stating that this would play a bigger role in critical clinical and translational research that leads to better health-care decisions.
On Feburary 9, Fluidigm Corporation (NASDAQ: FLDM) announced that a longitudinal study of around 250 pediatric patients infected with the COVID-19 virus will be conducted using Fluidigm mass cytometry technology and the Maxpar Direct Immune Profiling Assay.
Fluidigm Corporation (NASDAQ: FLDM) exclusive CyTOF technology was used in 162 clinical trials by the end of the second quarter 2021. Total revenue for the quarter ending was $31.0 million, up 19% from $26.1 million in the same quarter previous year.
At the end of the second quarter of 2021, 15 hedge funds in the database of Insider Monkey held stakes worth $110.3 million in Fluidigm Corporation (NASDAQ: FLDM), same as the preceding quarter worth $79.7 million.
Our data shows that Indaba Capital Management is one of the biggest stakeholders of Fluidigm Corporation (NASDAQ: FLDM), with 28 million worth $64.8 million.
1. Zogenix, Inc. (NASDAQ:ZGNX)
No of Hedge Funds Holders: 28
Zogenix, Inc. (NASDAQ: ZGNX) is a pharmaceutical firm based in the United States that is dedicated to finding therapeutic treatments with the potential to change the lives of people with rare diseases. Epilepsy and related seizures disorders are the company’s core focus. It is ranked first on our list of best micro-cap stocks to invest in.
On September 9, investment advisory UBS initiated coverage of Zogenix, Inc. (NASDAQ: ZGNX) stock with a Buy rating and a price target of $23, expecting the stock to generate more sales momentum.
On August 26, FINTEPLA oral solution, a product of Zogenix, Inc. (NASDAQ: ZGNX) used for treatment of seizures, was granted Orphan Drug Designation by the Japanese Ministry of Health, Labour, and Welfare. The company considers it a significant step forward in their mission to address the unmet needs of severe, uncommon epilepsy patients all over the world.
Zogenix, Inc. (NASDAQ: ZGNX) earned $18.8 million in sales during Q2 2021, up 37% from $13.7 million in the first quarter. Fintelpa generated $17.5 million in total product sales and $18.8 million in total revenue as reported in Q2 2021. Fintelpa has been prescribed to more than 860 patients till June 30,2021 which is an increase of 22% from the preceding quarters.
Our data shows that RA Capital Management is one of the biggest stakeholders of Zogenix, Inc. (NASDAQ: ZGNX) with 5.3 million shares worth $91.3 million.
At the end of the second quarter of 2021, 28 hedge funds in the database of Insider Monkey held stakes worth $345.7 million in Zogenix, Inc. (NASDAQ: ZGNX) up from 21 the preceding quarter worth $377.4 million.
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Disclosure: None. 10 Best Micro-cap Stocks to Invest In is originally published on Insider Monkey.
