Whether you’re looking at automotive stocks, financial stocks, tech stocks, value or growth, or the hottest trend of artificial intelligence, there’s something for every investing palate. As you’re building your portfolio for 2024, I encourage you to make sure your portfolio is diversified. One way to accomplish that goal is to look for micro-cap stocks.
Micro-cap stocks represent companies with a market capitalization between $50 million to $300 million. While that sounds like a lot of money, plenty of stocks out there are in the billions, and a couple that even have a market cap of more than $1 trillion. So a company with $300 million or less is pretty tiny.
But micro-cap stocks have a world of potential. Often they are in niche markets with emerging business ideas or technologies, so there’s a massive growth window for a company that can manage to it its stride.
Also, micro-cap stocks aren’t nearly as well-known as the blue-chip names. If you’re an astute investor, you can get in early before the average investor buys in.
But the knife cuts both ways. Micro-cap stocks are inherently more volatile than those blue-chip established names. That means potentially greater reward and greater risk. To invest in these micro-cap stocks, you should have a pretty high risk tolerance and be ready to ride the waves.
I’ve used the Portfolio Grader to identify some of the best micro-cap stocks you can buy. All of them have good overall grades, and each is an outstanding growth stock in its own right.
D-Wave Quantum (QBTS)
D-Wave Quantum (NASDAQ:QBTS) is a quantum computing company. Quantum computing represents the next generation of computing technology, as it uses quantum bits to perform calculations much faster than traditional computers.
That gives them a tremendous advantage over classical computers, which are binary code-based machines that use transistor technology.
D-Wave, which has a market cap of $150 million, works with customers who are attempting to develop quantum computing solutions that can solve logistics problems, perform complex scheduling tasks, ease traffic congestion and manage supply chains. Currently, it’s working on a collaboration to optimize the design of HVAC systems in complex buildings with a constrained quadratic model.
Revenue in the third quarter was $2.6 million, an increase of 51% from 2022. D-Wave issued guidance for the full year for revenue between $10 million and $11.5 million, and for full-year losses to be less than $56 million.
QBTS stock gets an “A” growth rating and a “B” overall grade in the Portfolio Grader.
Broadwind (BWEN)
If you think that the future of power generation lies in wind farms, Broadwind (NASDAQ:BWEN) is the company for you. Broadwind specializes in heavy fabrication and assembly needed to make the giant wind turbines that dot the landscape.
Broadband also makes industrial gears and gearboxes, heat-treated metals, equipment to regulate the flow of natural gas, and components for gas turbines, solar and industrial installations.
The Illinois company, which has a market cap of only $56 million, is already showing growth. Revenue in the third quarter was $57.2 million, up $12.3 million from a year ago. The company also showed a profit of $4.4 million in GAAP net income or 20 cents per share. That’s an improvement of $6.2 million from a year ago.
And the company’s backlog promises revenues to come. Broadwind has a backlog of $220 million, up from $88 million just a year ago.
BWEN stock is up 43% this year. It gets an “A” growth grade and a “B” overall rating in the Portfolio Grader.
OppFi (OPFI)
Staying in Illinois, we have OppFi (NYSE:NYSE), a Chicago-based company with a financial platform to connect community banks to customers looking for non-traditional loan offers.
The company, also known as Opportunity Financial, maintains its OppLoans platform as a portal for customers to apply for loans and get approved by a lender. Most loans are from $500 to $4,000, so they are a short-term fix.
The company’s services could be in demand as housing prices and inflation shrink discretionary incomes. OppFi will need to have continued success in adjusting and refining its credit models to ensure the applicants it approves can repay their debts.
Revenue in the third quarter was $133.1 million, an increase of 7% from a year ago. OppFi reaffirmed full-year revenue guidance of $500 million to $520 million and raised its net income forecast from $29 million to $35 million to $40 million to $42 million.
OPFI, which has a market cap of $482 million, is up 114% this year. With gains like that it probably won’t be a micro-cap stock for long. But for now, it qualifies, getting an “A” rating for growth and an “A” overall rating in the Portfolio Grader.
Augmedix (AUGX)
Augmedix (NASDAQ:AUGX) is a healthcare company that is using artificial intelligence to make the work of doctors and healthcare professionals more efficient.
With a market cap of $287 million, the company uses automated multi-party speech recognition to transcribe conversations between patients and clinicians. That makes updating a patient’s record much easier, saving time for healthcare workers and allowing them to see more patients in their shifts.
Healthcare workers can use the Augmedix platform on a smartphone to record their interactions with patients and create fully automated draft medical notes that the healthcare workers can then review and approve. It recently announced a partnership with Google Cloud, powered by Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) to power its MedLM technology with generative AI.
Earnings for the third quarter saw revenue of $11.8 million, up 50% from a year ago, and a 47% increase in clinicians. The company’s net loss for the quarter shrunk to $4.4 million from $5.5 million a year ago.
AUGX stock is up 280% this year and it gets “A” ratings for growth and overall in the Portfolio Grader.
Yiren Digital (YRD)
At a market cap of $264 million, Yiren Digital (NYSE:YRD) is an artificial intelligence-powered company operating in China. Yiren provides individual and business insurance, lifestyle and digital financial services.
Yiren used to be primarily a peer-to-peer lending marketplace, but following a regulatory crackdown moved to its current institutional funding-based financing product. While revenue contracted during this necessary change (and the impact of the Covid-19 pandemic), shares are on the rebound in 2023.
Even though the pandemic recovery in China has been slower than expected, YRD stock is up 118% this year. And as China slowly regains its footing, Yiren Digital appears set to prosper.
Earnings for the third quarter included $1.3 million in total loans, up 55% from a year ago. Revenue of $80.4 million was up 75% from a year ago.
YRD stock gets “A” ratings for growth and overall in the Portfolio Grader.
X Financial (XYF)
Not to be confused with a holding controlled by Elon Musk (although I’m sure he’s envious of the company name), X Financial (NYSE:XYF) is a personal finance company in China.
The company uses its platform to connect individual borrowers with institutional lenders. Its primary product is called Xiaoying Card Loan and provides customers with a line of credit.
Despite a market cap of only $180 million, X Financial is seeing rapid growth. The number of active borrowers grew in the third quarter to 1.8 million, up 27.9% from a year ago. Loans were up 48.6%.
Revenue in the quarter was $191.5 million, up 56% from a year ago.
XYF stock is up 24% in 2023 and gets “A” ratings for growth and overall in the Portfolio Grader.
SelectQuote (SLQT)
SelectQuote (NYSE:SLQT) is an online digital sales agency that provides quotes to individuals for life insurance, auto insurance, home insurance and Medicare.
The company receives a commission whenever it facilitates a sale, but it’s not an insurance company itself. Consider it more of a middleman that connects customers and insurers.
The stock struggled over the last five years, losing over 90%. But 2023 was a change of pace as SelectQuote started moving the needle toward success. The stock is up 120% this year and has steadily improved since September.
Earnings also paint an improved picture. For the company’s fiscal first quarter 2024, SelectQuote brought in $232.7 million in revenue, up from $162.4 million a year ago. It also managed to narrow its losses from $39.5 million a year ago to $22.4 million in this quarter.
Guidance for 2024 shows expected full-year revenue of $1.05 billion to $1.2 billion, with continued gains toward profitability. The company projects to cut its full-year losses in 2024 to a range of $22 million and $50 million.
With a market cap of $248 million, SelectQuote gets an “A” rating for growth and a “B” rating overall in the Portfolio Grader and one of the micro-cap stocks to keep your eyes on.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
