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Zacks Value Trader Highlights: Atlantic Capital, CAI, inTEST, Lumber and PCM

Zacks Equity Research

For Immediate Release

Chicago, IL – February 19, 2018 – Zacks Value Trader is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here:


5 Cheap Microcap Stocks

Welcome to Episode #129 of the Value Investor Podcast

Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio service, shares some of her top value investing tips and stock picks.

Small cap value stocks have historically been one of the best areas to invest but in the last 5 years, they have underperformed.

The S&P 600 Value ETF has returned just 18% over the last 5 years compared to 49.5% in the S&P 500 and 73.9% in the NASDAQ.

But that could mean an opportunity to stock up in both small, and even smaller, i.e. “microcap” stocks.

The definition of microcap can be different for each investor. It can range from as low as $50 million to $200 or $300 million.

For the purposes of this podcast, a market cap of $500 million or less was used in order to get a larger choice of stocks.

How Do You Find Good Microcap Stocks?

It’s tricky to screen for microcaps while using the Zacks Rank because that implies that there is at least 1 analyst covering the company.

But not many analysts cover the microcap stocks.

Additionally, you then need other solid fundamentals like earnings growth.

We don’t want to buy just any microcap. We want the best.

Screening for Microcap Stocks

In this screen, we looked for stocks with a market cap under $500 million, a Zacks Rank of #1 (Strong Buy) or #2 (Buy) and a PEG ratio of under 1.0.

The PEG should hopefully provide both growth and value while the Zacks Rank should provide rising earnings estimates.

This screen returned just 12 stocks.

5 Cheap Microcap Stocks

1.       Atlantic Capital Bancshares ACBI is headquartered in Atlanta and has $2.9 billion in assets. It has a market cap of $477 million and estimates are on the move higher for both 2019 and 2020. This bank has a PEG of just 0.5.

2.       CAI International CAI is a transportation company in containers, railcars and logistics worldwide. It has a market cap of $493 million and a forward P/E of just 6.

3.       inTEST Corp. INTT is truly a microcap with a market cap of just $74 million. The company designs and manufactures engineered solutions for Automated Test Equipment. Its products are used in a variety of industries including the semiconductor, auto and aerospace. It has a cheap forward P/E of 7 and a PEG of just 0.7.

4.       Lumber Liquidators LL is the largest specialty retailer of flooring in America with 413 stores. It has a market cap of $320 million. While its forward P/E is 24, which doesn’t indicate value, it has a PEG ratio of just 0.9 thanks to 2018 expected earnings growth of 141%.

5.       PCM Inc. PCMI is a multi-vendor provider of tech solutions with a market cap of $382 million. The shares have soared in 2019, up 78%, but are still cheap with a forward P/E of 11.9 and a PEG of 0.6.

What else should you know about finding great, cheap microcap stocks?

Listen to today’s podcast to find out.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.