Three Micro-Cap Stocks to Watch in June 2015

Micro-Cap StocksThere’s actually some earnings reporting going on at the moment, and some of the numbers are yielding decent micro-cap stocks to watch out for.

It’s a little early yet for the upcoming earnings onslaught. It’s exactly what this market needs, though. This time of year, the trading action in stocks can be downright awful.

Micro-Cap Stocks to Watch in a Growth Industry

There’s a trend among restaurant chains—the consumer is spending a little higher than before and average paychecks are going up. There are some good stocks in this industry, and institutional investors are buying.

I always find the restaurant sector can pay off well for a speculative investor. It’s one of the top sectors for risk capital money as far as I’m concerned.


Previously in these pages, we’ve considered some excellent restaurant stocks. In fact, Monday we looked at Cracker Barrel Old Country Store, Inc. (NASDAQ/CBRL), which continues to be a solid moneymaker for shareholders, both in terms of capital gains and income in the form of dividends. Even though this is a mature chain and concept, it’s a good earner, benefiting from modestly low gas prices. Right now, the company’s locations are producing good comparable growth.

So, to further look at the possibilities for getting in on this type of opportunity, here are two micro-cap restaurant stocks to watch in June 2015.

Zoe’s Kitchen, Inc. (NYSE/ZOES)

I like Zoe’s Kitchen, Inc. (NYSE/ZOES), a Mediterranean-themed casual fast-food chain based out of Plano, Texas. (See “Two Top Micro-Cap Stocks with Continued Momentum.”)

No doubt, this stock is expensive; but growth stories are slim in this market and they’re going to stay pricey as long as there are so few companies able to generate double-digit growth.

The company’s first quarter of 2015 produced comparable revenue growth of 36%, which is pretty impressive. This stock isn’t for the faint of heart and it isn’t a short-term trade.

Dave & Buster’s Entertainment, Inc. (NASDAQ/PLAY)

Another chain just reported good numbers for its fiscal first quarter of 2015 ended May 31. Dave & Buster’s Entertainment, Inc. (NASDAQ/PLAY) just raised its previous guidance for this fiscal year after solid first-quarter sales growth of 14.3% to $222.7 million.

The company produced impressive comparable store sales growth of 9.9% in the first quarter. This compares to an increase of 4.7% in the same quarter of the previous fiscal year.

The company’s bottom line improved substantially to $19.5 million, or $0.45 per diluted share, compared to $11.5 million, or $0.34 per diluted share, in the first quarter of 2014.

Management boosted its full-year sales forecast to between $822 million and $831 million, up from $808 million and $822 million previously.

This stock, also expensively priced, has been on a tear lately. The marketplace ate up a recent secondary offering of 8.5 million shares priced at $31.50 per share with an additional 1.275 million follow-on shares.

This micro-cap company is in growth mode and its share price reflects that.

Both Dave & Buster’s Entertainment and Zoe’s Kitchen have some notable strengths in a slow-growth world. While pricey, these stocks should be able to move higher going into 2016.