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12 Most Promising Micro-Cap Stocks According to Analysts

Fahad Saleem
9 min read

In This Article:

In this article, we will take a look at the 12 most promising micro-cap stocks according to analysts. To see more such companies, go directly to 5 Most Promising Micro-Cap Stocks According to Analysts.

If there’s one thing investors and financial markets in general don’t want more of in 2023, it’s risk. The 2022 market crash and the stubborn inflation that is expected to force the Federal Reserve to continue its rate-hike spree isn’t letting investors take a breather. However, long-term investors believe now is the right time to pile into stocks with strong upside potential.

"The Asset Class of Opportunity"

Oberweis Asset Management, in its report titled “Micro-Cap: The Asset Class of Opportunity,” said that investing in micro-cap stocks can become more appealing when valuations of asset classes are compelling.  The firm said that investing in micro-cap stocks can enhance the risk-adjusted performance of a total equity portfolio. That’s because usually micro-cap stocks don’t move by broader movements of US equities, bonds and foreign stocks. When seen in the context of the broader market downturn that started with rising global inflation and Russia-Ukraine war, micro-cap stocks look attractive since they give a chance to investors to take calculated risk that can bring huge profits in the long term.

The report highlighted some interesting data points which show that investing in micro-cap stocks can be profitable in the long term, if executed correctly. Oberweis said that micro-cap managers, over a long period of time, tend to generate higher returns than traditional small-cap managers. The report also said that volatility for micro-cap stocks isn’t “materially higher” when compared to small-cap stocks.

Another important point highlighted in the Oberweis report says that large-cap companies get a lot of attention as everyone, including major stock research and analyst firms, are focused on them. The report said these stocks tend to be more fairly priced as compared to small, unknown companies that don’t get a lot of attention. Another advantage this dynamic gives to investors in the micro-cap space was summed up by the report in these words:

“This lack of Wall Street research in the micro-cap arena means active managers who conduct their own fundamental research should have an information advantage which can help them generate above-market returns.”

Most Promising Micro-Cap Stocks According to Analysts
Most Promising Micro-Cap Stocks According to Analysts

Photo by AlphaTradeZone

Our Methodology

For this article we first used the Finviz stock screener to identify micro-cap stocks whose average analyst price target is at least 30% more than their current stock prices, as of February 14. We then sorted the resultant dataset in descending order of market cap and picked top 12 stocks. When then looked for one-year price estimate of these stocks on their respective Yahoo Finance pages. These stocks have huge upside potential based on their analyst price estimates and their current stock prices.

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