Best Micro-Cap Stocks for the Savvy Trader

Best Micro-Cap StocksFrom dividend-paying blue chips to the best micro-cap stocks, it’s difficult to be a buyer in a market that just bounced off a new record high.

While the monetary backdrop is still favorable for equities, we know that it’s the Federal Reserve’s intention to change the interest rate cycle. Accordingly, it’s reasonable not to expect any tailwinds from the broader market.

But in any market, there are industry trends providing above-average growth. This doesn’t mean now is the exact time to be a buyer, but there are plenty of growing companies with good prospects for the rest of this decade.

Best Micro-Cap Stock #1: LifeLock, Inc. (NYSE/LOCK)


As consumer identity becomes more and more digitized, a company like LifeLock, Inc. (NYSE/LOCK) is growing at a double-digit rate selling identity theft protection.

Based out of Tempe, Arizona, LifeLock just produced its 40th consecutive quarter of sequential growth in terms of sales and customer membership. The vast majority of the company’s sales are to the individual consumer market.

In today’s world, any business growing by double digits is an accomplishment. LifeLock’s 2015 first-quarter sales improved 25% over the same quarter last year to $134 million.

The company added 420,000 gross new members to its business in the first quarter of 2015, bringing its total customer membership to 3.89 million.

LifeLock is investing a considerable amount of resources into new business development. This year’s first quarter produced a net loss of $9.2 million compared to a net loss of $4.3 million in the first quarter of 2014.

But the company has almost $300 million in cash and marketable securities. This year’s total sales are expected to get close to $600 million with positive adjusted earnings.

Anything related to cybersecurity has been a hot commodity on the stock market. While valuations are lofty, these businesses have strong growth prospects for the next several years.

And there is still operational momentum among restaurant stocks. This is always a stock market sector worthy of attention.

Best Micro-Cap Stock #2: Fiesta Restaurant Group, Inc. (NASDAQ/FRGI)

Fiesta Restaurant Group, Inc. (NASDAQ/FRGI) is a growth business. This company operates the Pollo Tropical and Taco Cabana chains.

The company’s latest quarter slightly missed Wall Street’s sales consensus. But, make no mistake; this enterprise is still growing by double digits.

Best Micro-Cap Stock #3: Shake Shack Inc. (NYSE/SHAK)

One of the hottest current stocks with a recent initial public offering (IPO) is Shake Shack Inc. (NYSE/SHAK). The company sold 5.75 million shares at $21.00 per share. It’s currently around $70.00.

No doubt, valuations among many of these micro-cap stocks are very high. But this isn’t unusual with new listings. These are 100% speculative securities for risk-capital traders.

Restaurants and cybersecurity are two growth industry sectors. There’s still tons of money swashing around biotech stocks.

Operational momentum is a problem in this economy and where it exists, institutional money is plentiful. And this is why these high-valuation stocks are likely to remain this way. Double digit growth isn’t plentiful.