This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Best Micro-Cap Funds Pay Off Big-Time

BOSTON ( TheStreet) -- Investors bullish on prospects for a stronger economy next year have been buying everything from commodities and currencies to junk bonds and small-cap stocks.

They could go one step further and investigate mutual funds that own tiny companies that cost less than $10 a share. That means micro-cap funds.

Micro-cap fund managers seek bargain-priced stocks that may become the next Apple (AAPL), which now trades at $321 a share. The maker of the iPad and iPhone, once a micro-cap stock, now has a market value of $294 billion. Sometimes micro-caps amount to total losses, a rare occurrence in the large-cap category.

The micro-cap stock label is used loosely to describe publicly traded companies with market capitalizations of $50 million to $300 million.

Indicative of investor interest in these smaller stocks, the various categories of small-cap funds as tracked by Morningstar have a return of 25% this year, versus the 13% gain by all categories of large-cap funds.

And the pace has been picking up. The Russell 2000 Index, which gives a wide measure of small-cap market activity, is up about 9.7% since the end of October, double the Standard & Poor's 500 Index's 4.4% gain.

Micro-cap investing has a Wild West reputation, and, indeed, it's the most volatile sector of the market, but some funds have long-term returns that match those of some of the most conservative investments.

For example, the Perritt Micro Cap Opportunities Fund (PRCGX) has a 14% 10-year annualized return, while the Wasatch Micro Cap Fund (WMICX) has an 11% gain. The S&P 500, in contrast, has dropped 9% since December 2000.

Here are some highly rated funds with micro-cap holdings and a few of their stocks trading for under $10 a share:

1 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
QCOR $93.60 1.65%
BIOS $4.43 0.00%
GSL $5.42 0.00%
IDT $17.75 0.00%
SGU $7.40 0.00%


DOW 17,776.12 -200.19 -1.11%
S&P 500 2,067.89 -18.35 -0.88%
NASDAQ 4,900.8850 -46.5560 -0.94%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs