Micro-cap stocks are usually considered riskier bets than their mid-cap or large-cap brethren. However, fundamentally sound micro-cap stocks could benefit significantly from the current low-interest-rate environment and the continuing economic recovery. Therefore, we think it could be wise to bet on micro-cap stocks ARC Documents (ARC) and AstroNova Inc. (ALOT). The companies have delivered stellar performances over the past few months and their stocks are on track to continue moving higher in price. Read on.Stocks with a market capitalization of $50 million - $300 million are typically characterized as micro-cap stocks. These stocks are usually riskier investments due to their low liquidity and the issuing companies’ obscurity. While low liquidity often results in substantial price fluctuations, these companies' small stature often obscures their stocks from retail investors and Wall Street analysts.
In addition, because the stock market has been rallying relentlessly over the past few months, most large-cap and mid-cap stocks have become highly overvalued. But many micro-cap stocks still have plenty of upside to deliver due in part to their issuers’ easy access to capital thanks to the continued low-interest-rate environment. Also, the continuing economic recovery bodes well for them.
Micro-cap stocks ARC Document Solutions Inc. (ARC) and AstroNova Inc. (ALOT) have gained significantly in price over the past few months. And given their robust fundamentals and reasonable valuations, we believe they could continue rallying in the near term.