Is now the time to invest in micro-capitalization stocks? It can be for the right investor. Investing in stocks is a constant game of balancing return, valuation, market conditions and risk management. And while these often-volatile stocks can really bring the risk, the best micro-cap stocks can also bring big returns.
A micro-cap stock is a publicly traded company that has a market capitalization between $50 million and $300 million. Compared to large-cap or mid-cap stocks the micro-cap stocks are much more likely to go boom or bust.
And finding stocks to buy in the second half of 2022 is a challenging task, as the first half proved to be a very tough period. All major stock indices posted double-digit losses. But that can sometimes create opportunities.
The following are seven of the best micro-cap stocks to buy. They are risky, but they have a confluence of positive events — whether momentum, growth, or valuation — that makes them interesting plays for a rebound in the second half of 2022.
So let’s look at the best micro-cap stocks to keep your eye on right now.
| TGA | TransGlobe Energy Corporation | $3.41 |
| ESEA | Euroseas | $23.19 |
| RCMT | RCM Technologies | $20.62 |
| EDRY | EuroDry | $16.53 |
| LSEA | Landsea Homes Corporation | $6.92 |
| BGSF | BGSF | $12.03 |
| BBW | Build-A-Bear Workshop | $15.34 |
TransGlobe Energy Corporation (
TransGlobe Energy Corporation (NASDAQ:TGA) is an independent oil exploration and production company with business in Egypt and Canada. The stock is up nearly 14% in 2022, which is not that much given how far oil prices have rallied. This could mean further gains could be on the horizon as the company decided to “allocate a minimum of .”
The first-quarter 2022 financial results were strong, showing net earnings of $48.8 million compared to a loss of $11 million the same quarter a year ago. Petroleum and natural gas sales increased to $81.5 million a 93% year-over-year change.
The shares of TransGlobe Energy Corporation trade at a trailing price-earnings ratio of 2.73 offering an attractive .
makes the stock cheap and the firm announced its business operations are in-line with its plan in Egypt and in Canada.
Euroseas (
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Euroseas (NASDAQ:ESEA) is a shipping company operating in the container shipping market. The company has a fleet of 18 vessels — 10 Feeders, and eight Intermediate containerships.
The first-quarter 2022 financial results reflected a strong financial performance with a year-over-year revenue increase of 217% to $45.37 million versus $14.31 million in Q1 2021. Net income increased to $29.94 million compared to $3.79 million a year ago after not paying one for years.
This strong financial performance is bullish during a time when headwinds like the war in Ukraine, soaring energy prices and Chinese lockdowns are all harming the global economy.
The shares of Euroseas trade at a , and if the dividend becomes regular that would be another reason to buy. The one-year target estimate of $51 implies the stock could more than double.
and return on total assets of 28.59% are very strong and can support a significant rebound in the stock price.
RCM Technologies (
RCM Technologies (NASDAQ:RCMT) provides business and technology solutions to “ the operational performance of its clientele,” having operating segments consisting of Engineering, Information Technology and Specialty Health Care Services.
The stock has rallied 170% in 2022 but more upside is likely, as the one-year target is $24.50, signaling a potential rise of 23%.
The shares of RCM Technologies are now trading at a , which is still low given the enormous stock price rally year to -to-date.
In Q1 2022 the firm had a . The EPS GAAP of 62 cents came in 35 cents ahead of estimates, and revenue of $81.96 million was a beat by over $16 million.
The firm has a nice track record, beating EPS estimates in the past four consecutive quarters. and the forward EBITDA growth of 192.15% is very bullish.
EuroDry (
EuroDry (NASDAQ:EDRY) is a shipping company operating an 11-ship fleet of dry bulk carriers. It can be considered both a value and a growth stock, as its YOY revenue growth was 187.42% and forward revenue growth is expected to be 58.5%. The expected EBITDA growth of 137.44% is very high after year over year .
Having a forward P/B ratio of 0.37 and a forward
, EDRY stock is very cheap.
, as the net income margin is 55%, and the operating margin is 62.1%.
Another positive factor that is bullish for EDY stock is . Revenue soared 189.12% in 2021 and net income increased 630.02% to $31.15 million.
The shipping companies are exposed to economic and business cycles, but the timing as of 2021 seems to be strong and further capital gains are likely, as the one-year target is $45.43, .
Landsea Homes Corporation (
Landsea Homes Corporation (NASDAQ:LSEA) is a homebuilder working in areas like New York, Boston, New Jersey, Arizona, Florida and Texas. Its stock seems to be resilient, with moderate losses of 4.9% in 2022.
, with EPS of 28 cents beating expectations by 11 cents and revenue of $316.23 million beating by $74.91 million, but the good report failed to generate yet any stock price rally.
The homebuilder has beat EPS estimates in the past three out of four quarters which is a strong trend. And this, the shares of Landsea Homes Corporation seem very attractive now as they and a trailing price/book of 0.51.
and it is very bullish that the firm returned to profitability in 2021 with net income growth of 676.75% to 51.63 million.
BGSF (
BGSF (NYSE:BGSF) is a company that provides job opportunities in several industries, ranging from IT, Project Management and Accounting, to Cybersecurity, Property Management and Commercial.
The stock is down nearly 15% in 2022 but this could change soon, as rebounding from a decline of 29.62% in 2020 and net income in 2021 increased 604.75% to $10.46 million.
The firm has relatively low capital expenditures due to the nature of its business and therefore generates positive and consistent free cash flows, as the net operating cash flows are strong.
This firm has an excellent track record of beating EPS estimates in the .
The forward dividend yield of 4.9% is attractive and, notably, the firm has .
is a potential gain of 58%.
Build-A-Bear Workshop (
BBW) storefront in Philadelphia, Pennsylvania.” width=”300″ height=”169″ />
Build-A-Bear Workshop (NYSE:BBW) sells stuffed animals, clothing and accessories. This retailer has lost around 24% of its value in 2022 and now seems to be very cheap. Buying a cheap stock without solid catalysts to move higher is a risky investment decision. The firm, after a YOY is expected to have revenue growth of 23.35%.
Investors should be happy as the and at the same time, the ROE Growth (YoY) of 392.63% is phenomenal. On another note, it is great to see the firm has increased its net income growth much higher than its sales growth in FY 2022 as net income surged n.
The forward P/S ratio of 0.49 is low and indicative of a cheap stock. The free cash flow generation is also robust and bullish for the stock price. The one-year target of $33 if materialized would signal an upside of over 120%.
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Read More: Penny Stocks — How to Profit Without Getting Scammed
On the date of publication, Stavros Georgiadis, CFA did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
