Micro-cap stocks are inherently risky ideas that suit speculators looking for a quick gain. But to start, look beyond their stock price and instead at stock price multiplied by shares outstanding. Then review the five to 10-year chart to find out when things went south for the company.
Asking why the company’s valuation sank at a particular point in its history will help decode if it’s worth taking a chance on today.
The markets will discard and ignore a company whose business model has broken down. It will get little to no Wall Street coverage, and often trade at low volumes. But if the business is on a comeback as-yet unnoticed by the wider markets, these companies can reward investors in a big way.
Here are 7 micro-cap stocks you may want to take a chance on:
- XBiotech (NASDAQ:XBIT)
- RADA Electronic Industries (NASDAQ:RADA)
- Liquidia Technologies (NASDAQ:LQDA)
- Arlo Technologies (NYSE:ARLO)
- Ituran Location and Control (NASDAQ:ITRN)
- Sierra Wireless (NASDAQ:SWIR)
- Veritone (NASDAQ:VERI)
Turnaround plays abound in our coronavirus-hit market, but there are some obvious signs to keep an eye on. For example, when a company sheds assets and cut costs, that is a start. It also needs to pivot from a money-losing business to a potentially profitable one.
XBiotech peaked at $26.40 earlier this year but the stock has fallen on hard times since. The reason for the stock soaring was its “modified Dutch auction” offer to buy back $420 million worth of shares.
Offering to pay between $30.00 and not more than $33.00, when the stock closed at $18.62, created a unique arbitrage opportunity. But when investors tendered 41,164,725 shares, the company only planned to buy around