The 10 Best-Performing Micro-Cap Stocks Of 2019

This is a guest contribution by Tyler Laundon, Chief Analyst, Cabot Early Opportunities.

In 2019 the S&P 500 Index rose an astounding 29%. Much of that gain is the result of a horrible end to 2018 that saw stocks bottom the day before Christmas.

No doubt that end-of-year decline was exacerbated by the seemingly random Twitter post from Treasury Secretary Steven Mnuchin, writing while on vacation in Mexico on Sunday, December 23, just two days before Christmas.

In his post Mnuchin raised concerns that most market observers weren’t worried about when he stated that the nation’s six largest banks had ample credit to extend to American businesses and households.

If we all had the benefit of hindsight, we would have taken Mnuchin’s comments as a signal that it was time to jump into the market and buy stocks with every dollar we had!

Of course, hindsight is 20/20. And we can’t go back.

But we can look at what worked in 2019 after Mnuchin spoke and keep it in mind as we make decisions for the year ahead in 2020.

Specifically, I want to look at the best-performing micro-cap stocks of 2019. I pulled this list from the S&P 600 Microcap index, from which I downloaded calendar year returns then sorted from highest to lowest. After tossing out any stocks that up-listed or came public during the year (I only wanted stocks with 12 months of trading history in the index) the below names are what was left.

A couple of notes. First, many of these stocks are no longer micro-cap stocks—i.e. stocks with market capitalizations between $50 million and $300 million. But they were when 2019 began.

Second, I’d like to point out that seven of the 10 stocks are biotech stocks. That’s not too surprising given the high-risk, high-reward nature of biotech and that nearly one-third of all stocks in the micro-cap index are from the healthcare sector. But the prevalence of biotech stocks on this top performers list does illustrate the practical challenges of plucking what will be the best-performing micro-cap stocks out of the market at the beginning of the year, before they surge.

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