In a market that’s still trading off the Fed, in addition to reduced earnings expectations, top micro-cap stocks are not plentiful.
And those companies that are able to generate double-digit year-over-year growth are typically expensively priced in a market where institutional investors are still buying existing winners.
It’s tough for any business to be growing in this economy. And while valuations for many growing micro-cap companies are off the charts as it were, it’s likely to remain this way as long as a limited number of businesses and industries are growing at a rate much above the general economy.
However, I’ve unearthed a couple of micro-caps that are worth watching right now; in fact, these two top micro-cap stocks are generating double-digit growth.
Also Read: Three Micro-Cap Stocks to Watch in June 2015
LifeLock Inc. (NYSE/LOCK)
One interesting company that I would say falls under the “special situation” category is LifeLock Inc. (NYSE/LOCK).
We’ve looked at this business before in these pages and the stock has been on a solid comeback trail. This is a double-digit growth story; mostly still about sales growth as the company ploughs cash into new business development.
Essentially, LifeLock is a technology company selling personal identity theft protection, predominantly to the consumer market. The company is trying to get more enterprise customers, but the majority of revenues are still from subscription-based individuals.
LifeLock is a liquid micro-cap trading over a million shares a day on average. The position can be volatile, which adds to its attractiveness for short-term traders.
The company produced a good quarter with its most recent financials and its shares have been ticking higher. Expectations are pretty lofty with this firm. However, they are on balance, as it’s able to deliver the goods.
Zoe’s Kitchen, Inc. (NYSE/ZOES)
I also like Zoe’s Kitchen, Inc. (NYSE/ZOES)—another volatile micro-cap that can really move when the marketplace wants it to.
This restaurant chain recently reported very solid quarterly results and investors bid the shares.
I always figure that risk capital investors are well served by continually perusing the restaurant sector for opportunities. Tastes change and so do restaurant concepts. Thus, the right growth story at the right time can be an excellent wealth creator.
Zoe’s Kitchen falls into this category. Not surprisingly, the stock is very expensively priced. But this isn’t unusual with these kinds of stories, especially in a slow-growth world. (See “Two Top Micro-Cap Stocks with Continued Momentum.”)
In this market where the main averages are close to their all-time highs, there’s no rush to be a buyer. Therefore, a speculator doesn’t have to jump into the higher-growth names at this exact point in time.
Expensively priced micro-cap stocks can go on your radar for a while so you can get a feel for their price movements, as well as the market’s reaction to material corporate events.
Also Read: Top 5 Micro-Cap Stocks to Watch in 2015