3 micro-cap stocks worth watching

When it comes to investing in micro-cap stocks, it can sometimes be a real challenge to distinguish potential winners from those that may not offer much upside in the short term. However, a great way to uncover some possible leads is to attend conferences where investors can meet the management teams of these smaller companies.

As the largest independent event for microcap companies, the annual Microcap conference often provides some interesting ideas. This year’s edition of the conference concluded earlier this month with presentations from more than 75 different microcap companies.

In general, microcap stocks are those of companies with a market capitalization of less than $300 million. Despite their small size, some microcap companies have the potential to punch above their weight in their respective industries, so here are some of the most interesting stock ideas to emerge from the 2024 Microcap Conference.

Search for Eden

UK based Eden Research LONDON: EDEN specializes in sustainable, plastic-free solutions for crop protection, animal health and consumer products, with a focus on sustainable biopesticides and plastic-free encapsulation technology. The company’s vision is to become a “global leader in sustainable crop protection”.

Eden focuses on the sustainable protection of high-value crops, improving yields and marketability. The company has commercialized two of its products so far. The first product, Mevalone, is a biofungicide sold in 14 European countries, the United States, Australia and Kenya.

Eden Research partnered with Eastman chemistry NYSE:EMN to market its second product, a nematicide called Cedroz. The companies are targeting 29 countries, and so far 11 have granted full approval to the product, including the United States, Mexico, Spain and Italy.

Energy Genius

With a market capitalization of $498.7 million, Energy Genius NYSE:GNE technically it is a small cap stock. The company is a retail provider of green and conventional electricity and natural gas supply. It provides both on-site and community-based solar energy solutions, focusing on deregulated markets in the United States

Genie Energy also partners with commercial enterprises, utility-scale solar developers and community solar developers in the planning, financing, design, construction and operation of solar projects aimed at maximizing the value of solar generation.

Through its retail segment, the company serves homeowners and small, medium and large businesses by providing electricity from renewable or conventional sources. Genie Energy also provides carbon-offset natural gas and conventional natural gas supply and end-to-end energy consulting services.

The company’s Renewable Solutions division serves community solar programs, working with developers to finance their projects, acquire customers and manage the project. Genie Energy also allows commercial businesses to leverage on-site solar generation to reduce energy costs.

Hovnanian feats

The largest company on this list, Hovnanian feats NYSE:HOV, is also technically a small-cap stock with a market cap of $1 billion. However, it was added to the Russell Micro-Cap Value Index in June 2023 and its market capitalization has grown significantly since then.

Hovnanian is a national homebuilder that designs, builds and markets a variety of homes for sale in nearly 130 residential communities in 13 different states. In fiscal 2023, the company generated total revenues of $2.76 billion with 5,473 home deliveries, making it one of the largest homebuilders in the United States

Hovnanian has operations in Arizona, California, Delaware, Florida, George, Maryland, New Jersey, Ohio, Pennsylvania, South Carolina, Texas, Virginia, Washington, D.C. and West Virginia. Its homes are marketed and sold under the trade name K. Hovnanian Homes.

Investing in micro and small cap stocks

Small- and micro-cap stocks are typically more volatile than large-cap stocks, although this can be both a good and a bad thing. Hovnanian’s share price surge, which took it from micro-cap to small-cap status in a matter of months, is an example of how such volatility can work in investors’ favor if they choose wisely.

However, the possibility of considerable returns also comes with the possibility of taking significant risks. Unfortunately, it can be difficult to find public information on some micro-cap stocks. However, many top companies voluntarily disclose relevant information to investors, even if their small size prevents them from doing so.

Additionally, smaller companies that trade on major exchanges may be required to disclose more information. Of course, it’s always a good idea to research a company thoroughly before investing in it.

Before you consider Eastman Chemical, you’ll want to hear this.

MarketBeat tracks daily Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and Eastman Chemical wasn’t on the list.

While Eastman Chemical currently has a “Moderate Buy” rating among analysts, top-rated analysts believe these five stocks are better buys.

View the five stocks here