Stocks of small and micro-cap companies which have a market capitalization of between $50 million – $300 million are referred to as micro-cap stocks. The risk in such investments remains significantly high due to increased volatility and lower liquidity. As a result of lack of reliable publicly available information, such stocks are more exposed to the fraudulent schemes. However, if these stocks are researched properly, they have the potential to deliver strong and massive gains. More often than not, these gains are higher than companies which have larger capitalization. Therefore, investors should consider investing in some of the top high growth micro cap stocks for massive wealth creation.
Despite of the fact that micro-cap companies have the potential to deliver strong returns, the quality companies generally miss the public eye. Due to the lack of liquidity, they tend to have lower buyer interest, keeping them out of regular coverage from the media companies.
At times, micro-cap and small cap stocks have outperformed larger companies in long term. A report by Boston Partners has revealed that in early 1995 and June 2020, CRSP Equal Weighted Microcap Index saw a massive gain of ~740%, surpassing US Private Equity Index growth of ~716% and strong returns of S&P 500 of ~255%. Thus, if adequate due diligence is conducted and research methodologies are followed, top high growth micro cap stocks have the potential to post strong returns.
During the artificial intelligence rally which was seen in 2023, global investors and media had their entire focus on top AI stocks like Microsoft, Nvidia, Apple, Alphabet, etc. Even though we all know that these companies have indeed delivered massive gains, but there were some hidden gems catering to the micro and small-cap space which took advantage of such rally. Gains in these stocks were nearly same as these mega-tech giants. For example, Innodata Inc., a micro-cap stock, which has a market cap of ~$246 million makes the use of AI to improve data flows and operations of the clients. The company’s stock has seen a strong increase of ~180.39% YTD as on December 22.
With this in mind, we will now have a look at top high growth micro cap stocks for investors to buy now.
1. Redwire Corporation
The company is in the business of mission-critical space solutions and components for next-gen space economy, having an IP for solar power generation and in-space 3D printing.
It has announced its results for 3Q ended September 30, 2023, with revenues increasing ~68.1% to touch $62.6 million in comparison to $37.2 million for 3Q22. Its revenues saw an increase of 4.2% as compared to 2Q23. Comparable Revenues of the company for 3Q23 went up by 31.8% to $49.1 million in comparison to $37.2 million for 3Q22.
Net loss of the company for 3Q saw an improvement of ~39.3% to $(6.3) million in comparison to $(10.4) million for 3Q22. Contracted Backlog of the company went up by 59.5% year-over-year to reach $253.4 million as at September 30, 2023 in comparison to $158.9 million as at September 30, 2022.
3Q was the company’s third consecutive quarter where it delivered strong revenue growth and positive Adjusted EBITDA. The company remained disciplined in its technical execution, and it was able to balance growth with performance.
Total available liquidity of the company came in at $30.9 million as at September 30, 2023, which included $10.9 million of cash and cash equivalents and $20.0 million of available borrowings from its existing credit facilities. Operating and FCF saw an improvement year-over-year. Given its investments in business YTD and its LTM book-to-bill ratio of 1.38, the company looks strong to end its 2023 on a healthy note.
2. Blink Charging Co.
The company is the owner, operator, and provider of electric vehicle (EV) charging services.
It has released its 3Q results, with total revenues increasing ~152% to reach $43.4 million in comparison to $17.2 million in 3Q22. The company saw ~167% rise in gross profit to $12.8 million or gross margin of 29.5% in 3Q23 in compared to $4.8 million or gross margin of 27.7% in 3Q22.
It saw an increase of 162% in its product sales to $35.1 million in 3Q23 in comparison to $13.4 million in 3Q22. The company contracted, deployed or sold ~5,956 charging stations in the third quarter.
The company’s 3Q results exhibit continuation of momentum and growth which it has seen throughout fiscal year, as it has seen strong demand for both equipment and services and increased network fees. In first 9M of 2023, it was able to generate $98 million in revenue, placing the company significantly ahead of its FY22 revenue of $61.1 million, and its another quarter of 2023 revenue is yet to be recorded.
It increased its 2023 revenue target to $128 million – $133 million from the previous target of $110 – $120 million.
3. Great Elm Group, Inc.
The company, formerly Great Elm Capital Group Inc, operates as the holding company. It has four business lines consisting durable medical equipment, investment management and real estate with general corporate.
It has released its fiscal 1Q24 results, with fee-paying AUM totalling $451.4 million as at September 30, 2023, exhibiting a rise of 1% from June 30, 2023, and up ~5% year-over-year. The company’s assets under management totalled $640.6 million as at September 30, 2023, up marginally from June 30, 2023, and up ~3% year-over-year.
Total revenue for 1Q went up by 78% to $3.3 million as compared to $1.9 million for prior-year period, mainly because of higher incentive fees from GECC. Net income from continuing operations came in at $2.8 million for 1Q as compared to net loss from continuing operations of ($9.5) million during prior-year period.
Conclusion
While above are some of the top high growth micro cap stocks for investors to buy now, there are several other stocks which should deliver strong growth in 1H24. On the YTD basis, other AI-related small-cap stocks such BigBear.ai Holdings, Inc. and Rekor Systems, Inc. have seen an increase of ~153.42% and ~104.73%, respectively.
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