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Two Stock Picks From the Woodstock of Micro-Caps

Real Money’s Jim Collins comes back from small-company confab with names worth knowing.

The annual LD Micro Conference was held recently and Real Money’s Jim Collins was on hand to evaluate potential micro-cap stock winners.

“It's the Woodstock of micro-capitalism,” Collins wrote in Real Money. “Yes, I mean micro-capitalism, not Warren Buffett's annual clambake in Omaha. Specifically, I'm talking about the LD Micro Conference in Los Angeles. LD Micro's fearless leader, Chris Lahiji, had to shut things down last year, owing to the pandemic, but, unlike other conferences scheduled for the fourth quarter, decided to go to hybrid mode this year instead of fully remote.”

Collins spent his time at the conference jaw-boning with traders, analysts, C-level executives and wasn’t disappointed. “Everyone shows up to LD Micro,” he said. “Unlike the big tech titans, where macro rules, the micro in terms of stock valuation, picking individual microcap stocks requires intense due diligence. That's why I attend LD Micro.”

Looking back at what he learned at the conference, Collins likes a few stocks that kept coming up in conversation.

Cutting Edge: Acme United  (ACU) - Get Acme United Corporation Report. Collins has been meeting with ACU, and it's chairman, Walter Johnsen, at conferences for years, and he already owns the stock.

“As the world's leading manufacturer of scissors, with expertise in knives and cutting instruments and a growing presence in first-aid kits, Acme is a company that is not as sexy as some former tech startups,” he said. “While ACU lacks curb appeal, however, the company provides solid and steadily growing cash flows and those characteristics with its dividend.”

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ACU has invested heavily in IT systems and distribution facilities, and Collins believes there will be further bolt-on acquisitions in the ACU's two core areas of cutting and first aid. “Amazon continues to represent a growing share of ACU's business, with growth from specialty retailers, as well,” Collins said.

Shot in the Arm: Arcturus Therapeutics  (ARCT) - Get Arcturus Therapeutics Holdings, Inc. Report.  Arcturus sports a greater than $1 billion market cap, but management, led at LD Micro by CFO Amdy Sassine, does not forget the company's microcap roots.

“Andy presented Tuesday, on a huge day for ARCT, as that morning the company had announced the initiation of a phase 3b trial in Vietnam for its COVID vaccine candidate, ARCT-154,” Collins said. “As noted in the press release, ARCT's massive trial will enroll another 19,000 patients in Vietnam, and ARCT intends to request an emergency use authorization for ARCT-154 from the Vietnamese government by the year's end.”

The vaccine arms race continues to reach more human arms, and ARCT continues to prove out its vaccine as an alternative to other mRNA vaccines, especially for emerging markets, where use of a single-dose formulation can offset infrastructure issues.

“ARCT is still working on its original COVID vaccine formulation, ARCT-021, in partnership with a "major global entity" that ARCT hopes will announce soon,” Collins noted.

ARCT can meet the target. “With COVID booster shots seemingly transitioning from an issue of "if" to one of "when," it is clear the world will need hundreds of millions more vaccine doses,” Collis noted.

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