Microcap stocks are tiny companies with a market cap between $50 million and $300 million. They are generally high-risk, high-reward investments due to limited information and lower liquidity compared to larger companies - but given the upside potential when these investments go well, these small stocks continue to lure investors.
In fact, Barron's recently drew comparisons between microcaps and private equity, arguing that these tiny companies can provide the “same incredible growth potential” as startups. However, according to their analysis, microcaps are more attractively valued now than private equity, and with better liquidity.
That said, identifying investment-worthy microcap stocks can be an arduous task. Separating the wheat from the chaff among this seemingly unlimited universe of stocks - spanning across industries - is a task that can stump even market veterans. While some of these small players will go on to become wildly successful, others will turn out to be massive wealth destroyers.
Here's a roundup of five microcap stocks - all valued under $300 million - that have garnered a bullish following on Wall Street, and offer healthy liquidity levels for investors eyeing that next potential moonshot trade.
1. Bit Digital
Bit Digital (BTBT) is a digital infrastructure platform that focuses on Bitcoin (BTCUSD) mining and artificial intelligence (AI). They mine Bitcoin in locations across the US, Canada, and Iceland, and also offer Ethereum (ERJ24) staking and AI cloud-infrastructure services through Bit Digital AI. The company's market cap currently stands at $183.9 million.
With average volume of 5.6 million shares traded, Bit Digital stock is up 25% over the past year.
Overall, analysts have deemed BTBT a “Strong Buy,” with a mean target price of $5.08 - which denotes expected upside potential of about 128% from current levels. Out of 4 analysts covering the stock, 3 have a “Strong Buy” rating and 1 has a “Moderate Buy” rating.
2. Canoo
Founded in 2017 and based out of Los Angeles, Canoo (GOEV) designs and develops electric vehicles (EVs) with a focus on subscription-based mobility options. They offer unique multipurpose platforms for light-duty vehicles, trucks, and vans. Its market cap is currently at $173.8 million.
Canoo shares are down 83.5% over the past year. The stock has an average trading volume of about 5.96 million shares.
Analysts have a consensus rating of “Strong Buy” for GOEV stock, with a mean target price of $12.85. This denotes a massive upside potential of about 376% from current levels. Out of 6 analysts covering the stock, 5 have a “Strong Buy” rating and 1 has a “Hold” rating.
3. Kronos Bio
Based out of Cambridge, Mass., Kronos Bio (KRON) is a clinical-stage biopharmaceutical company developing treatments for cancer and other diseases. Their focus is on using small molecule drugs to target protein degradation pathways in the cell. Their lead drug candidate, KB-0742, is currently in a Phase 1/2 clinical trial for the treatment of multiple myeloma.
With a market cap of $58.8 million and average trading volume of 454,071 shares, Kronos Bio stock is down 27.6% over the past year.
Overall, 5 analysts have unanimously rated KRON a “Strong Buy,” with a mean target price of $7.62, which denotes 677% upside potential from current levels.
4. OrganiGram
Founded in 2012 by Dennis Puncher, Blake Murray, and Richard Baveira, Organigram (OGI) is a licensed producer of cannabis for medical and adult-use markets in Canada. They cultivate, process, and sell various cannabis products including dried flowers, oils, and concentrates. Additionally, they operate five patient education centers focused on medical cannabis use. Its market cap is currently at $191.9 million.
With average volume of 1.75 million shares traded, Organigram stock is down 5.2% over the past year.
Analysts have deemed the cannabis stock a “Moderate Buy” with a mean target price of $3.07, which indicates an upside potential of about 65% from current levels. Out of 5 analysts covering the stock, 3 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, and 1 has a “Hold” rating.
5. D-Wave Quantum
Founded in 1999, D-Wave Quantum (QBTS) is a leading Canadian developer of quantum computers focusing on commercial applications. Their systems use a different technology than traditional computers, potentially offering faster processing for specific problems. They offer cloud access to their quantum computers and develop software tools to help users leverage this technology.
With a market cap of $239.2 million and average volume of 3.1 million shares traded, QBTS stock has rallied 196% over the past year.
Overall, analysts have a rating of “Strong Buy” for QBTS, with a mean target price of $3. This denotes an upside potential of roughly 104% from current levels. Out of 5 analysts covering the stock, 4 have a “Strong Buy” rating, and 1 has a “Moderate Buy” rating.
