MENU

4 massive micro-cap stocks

I find small stocks to be exciting. Like many, I sometimes get swept off my feet by healthy balance sheets, dividends and the chance to win big. These four stocks have been rewarding for investors willing to leverage more risk from their portfolio but it’s important to remember they are sometimes illiquid and have small market capitalisations. Nevertheless, here are my favourite micro caps for the next year.

A stock that’s definitely worthy of a spot on watchlists is Beyond International (ASX: BYI). Beyond has been producing television programs since 1985 when it started the Beyond 2000 series on channel 7. Since then, it’s started a number of new series including Rush TV, Mythbusters and Hot Property. With a market capital of $110 million, debt to equity ratio of 0.1%, 3.3% dividend and a P/E of 13, Beyond has been neglected by Mr Market.

My favourite micro-cap of the year has been Allied Healthcare Group (ASX: AHZ). That’s partly due to the fact it’s risen over 200%, but also because it has the possibility to go even higher. As a diversified healthcare company that specialises in commercialising tissue-engineering technology, Allied has recently been approved to market and sell its CardioCel product in Europe. CEO Lee Rodne described the approval as a “key milestone” and said he expected the company to witness a “significant lift in company revenue over the coming years”.

Sometimes you have to pay up for the things you want. I have seen some expensive beers in nightclubs but this must be the most expensive drink on the ASX because its boasts a P/E of 160. Gage Roads Brewing (ASX: GRB) produces and distributes its award winning Sleeping Giant IPA and Atomic Pale Ale beverages through Woolworths stores Australia-wide. After refreshing its balance sheet in the past 12 months, signing several new long-term contracts and growing profits 72%, Gage Road definitely deserves a spot on watchlists.

The last company on my list is certainly not the least. Nick Scali (ASX: NCK) retail stores might be facing headwinds from a lower Australian dollar and poor consumer confidence but I’m betting one of those things will change and help the high profile furniture store turn a another great profit. It pays a 4.6% dividend fully franked, has minimal debt and is well positioned for an upwards trend in consumer confidence.

micro
Source: Google Finance

Foolish takeaway

Diversifying your money across multiple micro-caps is perhaps the best way to take advantage of the ‘next big thing’. Look for good balance sheets, liquidity, visionary management and of course, a product people need or want — these four companies tick all those boxes.

These stocks pay great dividends but they are not our favourite. Interested in our #1 dividend-paying stock? Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

More reading


<i>Motley Fool contributor Owen Raszkiewicz owns shares in Allied Healthcare and Gage Roads Brewing. 

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.