Despite a shaky start to the year, we’ve largely seen nothing but green.
The Dow Jones Industrial Average, Nasdaq and S&P 500 set new all-time highs.
And over the past year, these indexes have surged 20% or more.
But the same can’t be said for small cap and microcap stocks.
The Russell 2000 last set a new all-time high back in August 2018. And it’s struggled since then to keep pace with its larger brethren.
Meanwhile, microcaps have fared even worse.
The iShares Microcap ETF (NYSE: IWC) – which tracks the Russell Microcap Index – has gained a mere 12.5% in the last year.
That’s less than half of what the Nasdaq and S&P gained in 2019.
The question now is… does that underperformance represent opportunity?
This week’s Making the Grade will seek to answer that question by looking at price target changes for lagging microcaps. These companies are tiny gems that Wall Street believes will shine bright in the new year.
Going Small to Win Big
To start off, I looked for opportunities where analysts have raised their price targets significantly over the past 90 days.
Then I compared those price targets with where shares are currently trading. This gives us the most bullish scenario.
So here are the 10 microcaps Wall Street believes offer 200% upside or more…
Liquidia Technologies (Nasdaq: LQDA) shares are trading just above $5. But analysts see considerable upside.
The late-stage biotech company is working on a dry powder version of treprostinil that users inhale. This is for pulmonary arterial hypertension (PAH) treatment.
PAH is a $3.7 billion market in the U.S. And Liquidia plans to have a new drug application for this treatment submitted to the Food and Drug Administration in the first quarter of this year.
The most recent price target for shares is $37. That represents a 625.5% upside from where shares are currently trading!
Lineage Cell Therapeutics (NYSE: LCTX) is another biotech Wall Street is bullish on.
One of the company’s focuses is degenerative diseases in the U.S. Degenerative diseases are conditions – like dry macular degeneration, acute spinal cord injuries and non-small cell lung cancer – where the functions of the tissues or organs affected get worse over time.
Shares are trading for less than $1 right now. But analysts have raised their price target on Lineage from $3 to $4 over the past three months.
That amounts to a 426% gain from where shares are currently trading!
AcelRx Pharmaceuticals (Nasdaq: ACRX) spends its time trying to rid the world of pain. And its lead product candidate at the moment is Dsuvia, a tablet of sufentanil that is placed under the tongue to treat moderate-to-severe acute pain.
Shares are trading around $1.90. But over the past 90 days, Wall Street has grown increasingly bullish. Price targets have been raised from $7 to $9, representing an upside of 371%!
Aldeyra Therapeutics (Nasdaq: ALDX) is exploring medicines for immune-mediated ocular and systemic diseases. This includes allergic conjunctivitis, noninfectious anterior uveitis and Sjögren-Larsson syndrome. It has a partnership with Janssen Research & Development, one of the Janssen Pharmaceutical Companies of Johnson & Johnson.
And analysts are expecting shares of the microcap to soar!
Over the past three months, Aldeyra’s price target has increased from $28 to $29. With shares currently trading around $6.20, that represents an upside of 367%!
Of the microcaps that appeared on my list, Unity Biotechnology (Nasdaq: UBX) had one of the largest price target increases over the past three months. Bloomberg data shows analysts raised their outlook from $21 to $31.
On Monday, shares hovered around $7. So that’s a not-to-be-ignored 354% projected upside!
This biotech’s medicines are seeking to halt, slow or potentially reverse age-associated diseases.
Its treatment for moderate-to-severe osteoarthritis of the knee is in Phase 2 trials.
And Unity is planning to submit investigational new drug studies for age-related macular degeneration, diabetic retinopathy and diabetic macular edema in early 2020.
Microcap stocks are some of my favorite to trade.
Few things entice investors more than snatching up shares of a company for a couple bucks or less with the potential to sell them for $20 or $30. That’s the ultimate microcap trader’s dream.
Wall Street believes these 10 tiny gems hold that potential. So that might mean they deserve a look.
Here’s to high returns,
Matthew
About Matthew Carr
Matthew Carr is the Chief Trends Strategist of The Oxford Club. His unique take on investing – which involves using a strategic system that chooses companies based on pre-momentum, high growth and discounted prices – has led to countless outsized gains.
Matthew cut his teeth in the industry as a writer for the energy trade publications Natural Gas Week, Gas Market Reconnaissance and Oil Daily. He also dug into exports and international trade finance for Business Credit magazine.
With two decades of financial experience under his belt, Matthew’s expertise ranges from classic industries such as retail and oil and gas to cutting-edge markets like 5G, emerging tech, cybersecurity and cannabis. If it’s moving the markets, you can bet Matthew is there.
