The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( Zenpenny) -- Over the past few months I have mentioned a number of names that I thought would present opportunity for profit to investors over an intermediate to long-term time horizon. What I've rarely done is to pass on opportunities in my favorite area for investment: micro- and small-cap stocks. I go one step further in my research of these names and look for companies that are undergoing some type of distressed situation that forces old habits to disappear, being replaced by new ways of doing things that tends to bring out the value in a much more timely manner.

Investors have a tendency to get caught in value traps more often than not. You will look at a company that seems reasonably priced based on any number of metrics and think to yourself that a 100% gain will be a simple goal over the next 12 to 24 months. What ends up happening is the stock is passed over multiple generations as your great grandchildren await the day when the promise of value becomes a reality. Sure, I am exaggerating a bit. But you get my point.

What investors overlook more often than not are catalysts. Every investment needs a catalyst to realize its value. It doesn't matter if it seems like the cheapest stock in the history of our universe, if a catalyst doesn't exist to extract the juice from the lemon, then it will sit around doing absolutely nothing.

I have come up with three names that not only provide value, but have the catalysts necessary to see that value become a reality. The catalysts come in the form of new economic realities, a restructured balance sheet/management team or a macro trend that will favor the company going forward.


MAMS Software Group ( MAMS) is a U.K.-based company that provides software to automotive parts distributors, service companies and manufacturers. They have a dominant position in their marketplace with a controlling share of the current market. Among their current customers in the U.S. you have: Autozone, NAPA Auto Parts, Monro Muffler Brake, Fountain Tire and US Autoforce.