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Blue-chip companies rightfully make up the bulk of most people's investment portfolios. These large-cap firms possess considerable industry leverage, as well as a vast sum of financial resources. Their status and importance to the underlying economy means that they are the least likely to crumble, regardless of external pressures. Ultimately, blue chips provide the confidence and stability to which you can pin your long-term hopes.
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But there's a reason most financial advisers say to have at least a small allocation to speculative investments. Those large caps can offer somewhat modest returns. Single-digit annual gains and a 2% dividend yield? No … here and there, investors should try to generate bigger returns from more explosive small- and even micro-cap stocks.
Micro-cap stocks, as the name suggests, are tiny companies - they typically have little financial backstop, and often pin their hopes on a single product or service. Or they might be the specialty parts supplier to a larger client. So long as business is good, micro-cap stocks can soar to the moon. But as soon as anything upsets the supply chain, disaster is only a mouse click away.
While many investors think nothing of investing in small-cap and micro-cap biotech companies, there are plenty of high-growth opportunities outside the medical arena. Technology, media and even defense - there are smaller companies trying to break through just about everywhere.
Of course, most micro-cap stocks - especially those that trade over the counter - are complete garbage, existing only because morally rudderless attorneys were willing to legitimize a fly-by-night operation. But a few smaller companies actually trade on real exchanges and have honest-to-god legitimate financial results - so you at least have a better measure of what they are and the direction they're heading.
Many of these investments still entail enormous risks, but if you're looking for somewhere to put the speculative funds in your portfolio for 2017, you could do worse than these 10 micro-cap stocks to buy:
Top Micro-Cap Stocks to Buy for 2017: Heat Biologics (HTBX)
Click to Enlarge Heat Biologics Inc . (NASDAQ: HTBX ) is a development-stage biopharmaceutical company with an incredibly innovative approach to the field of oncology.
Rather than reinventing the wheel in terms of cancer treatment, why not enhance what is already available? This led to the creation of the Immune Pan-Antigen Cytotoxic Therapy, or "ImPACT" for short. Essentially, this biotechnology transforms cancer cells into a naturally occurring protein called "gp96."
According to HTBX, "gp96 is a " molecular warning system " that has evolved important properties as a natural defense against necrotic cell death, in order to serve as a sentinel to alert our immune systems to the presence and identity of dangerous pathogens." By inducing this protein's production, the HTBX therapy allows for a multi-pronged attack against malignant cells.
Unlike other exotic pharmaceutical solutions, this is using nature to protect nature.
One of the main caveats (and this will be the case with most of the rest of these picks) is the inherent riskiness of micro-cap stocks. For HTBX, the risks are especially profound. Its initial public offering price was $10 a share back in summer 2013. Today, they sit near 75 cents.
But the stock is a quick mover. Just recently, shares jumped above the $3 level for a couple of days. You could hope to lock in profits on a quick spike, though if HTBX is able to actually produce something meaningful and sustainable, there's less pressure on perfectly timing an exit.
I'm certainly not suggesting HTBX will be the next Pfizer, Inc . (NYSE: PFE ). But there's enough movement here to justify this pick as one of the best micro-cap stocks to buy.
Top Micro-Cap Stocks to Buy for 2017: GSI Technology (GSIT)
Click to Enlarge Arguably, one of the greatest shifts that will occur in the broader economy is the semiconductor industry. A sector that is currently dominated by big-wigs like Intel Corporation (NASDAQ: INTC ) and Qualcomm, Inc . (NASDAQ: QCOM ), these giants will have to branch into new and multiple businesses to survive. Just making chips won't cut it, especially when the personal computer market is moribund.
Enter GSI Technology Inc . (NASDAQ: GSIT ). GSI's primary focus is on the development of static random access memory (SRAM) and low latency dynamic random access memory (LDRAM).
GSI is actually no penny stock - it currently trades for around $6 a share, which is a good 60% better than where it traded at the beginning of the year. It's also at highs last seen in early 2015. That's because while the company is fighting off sliding revenues, it is cutting into its losses, bleeding $2.17 per share last year versus $6.19 two years ago.
A few highlights from its recent quarter include improved sales to Alcatel-Lucent SA (ADR) (NYSE: ALU ), from $3.5 million in 2015 to $5.7 million this year.
GSIT still features many of the hallmarks of a micro-cap stock, including thin trading volume of just more than 40,000 shares per day. Still, GSI Technology is an exciting company that deserves to be on your list of micro-cap stocks to buy.
Top Micro-Cap Stocks to Buy for 2017: Genius Brands International (GNUS)
Click to Enlarge If the latest drama in popular culture has taught us anything, it's that America is steadily losing its moral compass. So much of what we find through the TMZ -generated media blitz is sensationalism for its own sake, typically revolving around the central question: who's sleeping with whom?
Is there anything today worth watching or listening?
Genius Brands International Inc . (NASDAQ: GNUS ) steps into this moral malaise with a resounding "yes." GNUS is a content and brand management company that focuses on creating meaningful and enriching media entertainment for toddlers to teens. GNUS has partnered with a number of industry professionals from Walt Disney Co . (NYSE: DIS ) to Sony Corp. (ADR) (NYSE: SNE ) to offer premium quality products. Unlike the "edutainment" media from yesteryear, GNUS is … well, relatively relevant and cool .
And recently, the company released a letter to shareholders stating that early sales of their "SpacePOP" collection - distributed at nearly 300 Toys"R"Us locations nationally - were selling strong after their Dec. 1 launch.
As with virtually all micro-cap stocks, GNUS has its fair share of pros and cons.
Next-generation edutainment should be a hot commodity. However, GNUS has had trouble keeping revenues buoyant, and it still is suffering considerable losses, including a $3.48 per share loss last year.
But the business proposition is at least promising. So long as you practice extremely tight money management, GNUSis at least worth a flyer.
Top Micro-Cap Stocks to Buy for 2017: Gatekeeper Systems (GKPRF)
Click to Enlarge No matter what your political affiliations are, one cannot ignore the unfortunate fact that there is a racial divide in this country. Even more worrisome, these issues all too often involve law enforcement. Communities entrust local police with keeping law and order.
However, the potential for that trust to be breached exists, and this underlying implication has been at the forefront of our social discourse.
More than ever, law enforcement agencies need to equip their field officers with monitoring devices to ensure accountability. This is why I believe Canada's Gatekeeper Systems Inc . (OTCMKTS: GKPRF ) is one of the best micro-cap stocks to buy.
Gatekeeper's wearable surveillance products for law enforcement and military agencies have gained traction, and should continue to find big demand. The reality is that society is increasingly violent. Wearable surveillance helps reduce speculative lawsuits and protects reputations. These benefits are also highly sought after by the military, which is the reason why one of Gatekeeper's recurring clients is the U.S. Air Force.
Yes, this is stock trades for just over a quarter, so the volume of a few hundred thousand shares every day is a little misleadingly high. But the company has grown revenues from $3.84 million three years ago to $5.94 million in 2015, and it's on pace for another year-over-year sales improvement this year. Meanwhile, net losses have shrunk from $2.63 per share to just 92 cents in the same time frame.
GKPRF is not the safest bet in the weapons space, but it's not a bad one, either.
Top Micro-Cap Stocks to Buy for 2017: Full House Resorts (FLL)
Click to Enlarge Major casino stocks can be quite a gamble due to their exposure to elements completely outside their control.
Case in point: Macau, the former Portuguese colony turned the casino mecca of the world. If anything were to affect that gaming district, the reverberations could be quite severe - as they were just a few days ago!
In these circumstances, less is more.
That's why I pegged Full House Resorts, Inc . (NASDAQ: FLL ) as one of the micro-cap stocks to buy. Based in Las Vegas, FLL's assets are all "in house," with operations in Mississippi, Indiana, Nevada and Colorado. Even better, these locations aren't slapped on with a generic label. Rather, each casino facility is tailor-made according to regional customs and tastes.
FLL stock is a "winner, winner, chicken dinner!" in 2016, thanks in large part to a renewed market push following the presidential election victory of Donald Trump. However, Full House isn't wholly a Trump story - the stock has ridden a long-term bullish trend channel since August 2014.
Full House is on pace for its second consecutive year of increased revenues. If President-elect Trump can engineer a true economic recovery, look for FLL to jump even higher.
Top Micro-Cap Stocks to Buy for 2017: MagneGas Corporation (MNGA)
Click to Enlarge Most micro-cap stocks that generate attention do so because they're doing something like hawking the next groundbreaking innovation or busy marketing some new protocol that will revolutionize their target industry.
The question usually is whether the company's financials can hold out long enough for the company to figure out profitability.
MagneGas Corporation (NASDAQ: MNGA ) is an alternative energy company, MNGA has a proven track record of converting liquid waste products into hydrogen based fuels. The patented technology won the "Best Alternative Fuel Solutions Award" from The New Economy .
The implications of this technology are profound, and they almost have to be to mask MagneGas' conspicuous flaw: its losses.
While MNGA has ramped up its revenues 260% in three years, its red ink is dripping more rapidly, too. MagneGas lost $7.14 per share on are deepening, too. MagneGas lost $7.14 per share on $680,000 in revenues in 2012, and while its top line hit $2.43 million last year, its losses expanded to $9.14 per share.
Recovering gas prices aren't doing this revolutionary energy source any favors. MGNA stock is off more than 70% so far this year as a result.
But if MagneGas can hang around long enough, it might just prove it's the energy stock of the future.
Top Micro-Cap Stocks to Buy for 2017: Marathon Patent Group (MARA)
Click to Enlarge Intellectual property is serious business.
In prior eras, inventions were often limited to giant corporations like 3M Co . (NYSE: MMM ). But with the advent of the internet and the age of digitalization, innovation is practically a nature byproduct.
It's become easier than ever for smaller firms and individuals to literally create the "next big thing."
What if there was a way to harness the best innovations under one roof, creating a revenue source for inventors and value for shareholders? That's the main purpose behind Marathon Patent Group Inc . (NASDAQ: MARA ). MARA actively searches for game-changing patents in any technological field. Covered sectors are diverse, ranging from automotive to biomedical . Through its subsidiaries, Marathon manages a total of more than 10,500 U.S. and foreign patents.
Of course, it's known to many others in the industry as a "patent troll."
As an investment, MARA falls under the extremely speculative category - even compared to other micro-cap stocks. It relies on things such as a $24.9 million ruling against Apple Inc. (NASDAQ: AAPL ) over Siri voice technology to make its way, so the financial situation is far from stable.
However, with its far-reaching intellectual asset base, MARA is a unique organization among micro-cap stocks to buy.
Top Micro-Cap Stocks to Buy for 2017: Microvision (MVIS)
Click to Enlarge Plenty of micro-cap stocks deserve the bad rap that's associated with the sector. However, one of the reasons to consider smaller organizations is that innovation can sprout from anywhere.
It's not unusual to see "Global 500" companies incorporate technologies that were originally advanced by lesser-known names. Such firms can focus on one or two specialties, whereas larger outfits would have trouble profiting from narrow projects.
This is the benefit of owning shares of Microvision, Inc . (NASDAQ: MVIS ). MVIS is the inventor of the PicoP scanning system , which is an "ultra-miniature laser projection and imaging solution" based off the company's earlier laser beam platform. One of the benefits of the PicoP system is state-of-the-art graphic visuals. It's caught the attention of Sony Corp (ADR) (NYSE: SNE ), which uses it across an array of high-end consumer electronic products. The next step for MVIS is incorporating PicoP in self-automated driving.
Although the technology is proven and exciting, MVIS has had a rough go at it in the markets. That's unfortunate, because it doesn't reflect improving fundamentals such as revenues that already have surpassed last year's - and that's with a quarter to go!
MVIS is a gamble. However, if power players like Sony is willing to play ball, Microvision deserves a second glance.
Top Micro-Cap Stocks to Buy for 2017: Lightbridge (LTBR)
Click to Enlarge Ever since the Fukushima disaster, nuclear energy has been under a dark cloud. Indeed, any discussion of nuclear platforms is likely to generate controversy.
There are simply very few materials out there that are so useful, and yet so permanently destructive if handled incorrectly. Worse yet, all the safety precautions imaginable are useless against a "determined" act of God.
Despite the obvious risks, there's another unavoidable fact - when people flip the switch, they expect the light to turn on. That's the hope for Lightbridge Corp . (NASDAQ: LTBR ), a nuclear fuel technology company that specializes in power output improvements for existing reactors and implements safety measures that meet today's strict environmental standards.
The primary issue for investors, though, is that LTBR is highly levered towards the uranium spot price … and prices are miserable.
Bluntly speaking, uranium must improve for Lightbridge to have a fighting chance. The company is sustaining deep losses of between $3.60 and $4.60 per share annually for years. However, given the number of years since the Fukushima incident, the investing public may be willing to engage nuclear energy once again. So let's not make any mistake about it - Lightbridge is all about picking the bottom.
But if uranium does pick up, expect LTBR to snap to attention.
Top Micro-Cap Stocks to Buy for 2017: Kindred Biosciences (KIN)
Click to Enlarge If you asked a random sampling of people what makes America great (again), I'm reasonably sure that our economy, our military and our entertainment machine will rank among the top answers.
But I think what really stands out is our love for our pets.
Think of all the movies, shows, and commercials that feature animals. If you didn't know any better, you'd think that animals were more important than humans.
Kindred Biosciences Inc . (NASDAQ: KIN ) is one of a very small handful of companies that play in the animal healthcare industry. The company's hopes rest on Mirataz (a feline weight loss management drug) and Zimeta (for alleviating fever in horses), which will undergo trials in 2017. The company expects both to be approved within the year.
Time will tell.
Investors are hopeful, though. KIN is up nearly 40% in 2016 - this while absorbing a 19% loss in November, no less.
I believe KIN is one of the best micro-cap stocks to buy for 2017, but buyer beware: This is a "pre-revenue" company, and trial failures for both drugs would likely send this $5 stock to the floor.
As of this writing, Josh Enomoto was long SNE.
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