10 Micro Cap Value Stocks With Big Potential

I am a member of AAII (American Association of Individual Investors) and one of their more popular screens is the Shadow Stock Screen. I conduct a close replication of this screen on a monthly basis. This is a very simple screen that seeks out small/microcap value stocks. The screen criteria I use within stockscreen123 are:

No over-the-counter stocks

No financial stocks

Market cap > $20 Million and < $200 million

Previous EBITDA quarter and trailing twelve months are positive

Share price > $1

Price/book < .80

Price/sales < 1.2

Top 10 stocks are selected based on highest 52 week returns

Minimum average daily volume > 5k shares

This is the ninth month of performing the screen. Decembers results averaged 12.29% for the 10 stocks, led by Silverleaf Resorts' (SVLF) return of over 38% in 4 weeks and Fuwei Films (FFHL) 34% 4 week return (returns are hypothetical and exclude commissions and taxes, free trades are always one option to avoid commissions). The most recent month this strategy returned an average of 19.22% in four weeks. As I have repeatedly stated this strategy tends to be high beta - it performs very well in bullish markets and may underperform in bear markets. Clearly, it has been very profitable in recent months as equity markets continue to rise.

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One option is to abandon this type of strategy or move to cash when an underlying index such as the Russell 2000 is trading below a long term moving average such as the 200 day moving average. Currently the Russell 2000 is above its 200 day moving average. Another consideration is to hedge the strategy by shorting a small cap ETF or purchasing an inverse small cap ETF.

Ticker	Name	Trend	Rank	MktCap	Pr2 Sales TTM	Pr2 Book Q	EBITDA TTM	EBITDA Q	Pr52W %Chg
ABL	American Biltrite Inc.	Here	98.85	24.78	0.11	0.52	3.18	1.79	236.45
SVLF	Silverleaf Resorts, Inc.	Here	98.4	93.29	0.41	0.45	53.93	13.71	208.75
GFN	General Finance Corporation	Here	97.35	67.36	0.4	0.61	25.67	9.2	167.05
COBR	Cobra Electronics Corporation	Here	88.26	25.17	0.23	0.77	4.46	1.73	81.78
BSET	Bassett Furniture Industries	Here	82.46	84.33	0.36	0.79	1.77	2.83	62
HAST	Hastings Entertainment, Inc.	Here	80.13	54.93	0.1	0.54	39.02	2.01	57.18
MDH	MHI Hospitality Corporation	Here	78.6	27.48	0.36	0.69	14	3.64	54
SURW	SureWest Communications	Here	74.21	175.73	0.73	0.65	74.69	20.7	46.41
SGMA	SigmaTron International	Here	70.45	32.5	0.23	0.66	9.85	2.62	41.2
TGX	Theragenics Corporation	Here	69.38	62.23	0.76	0.78	11.09	2.28	40.15

The current top 10 stocks are also below. FFHL, which had been a stellar performer in recent months on the list, returning nearly 29% last month alone, is no longer on this months list. I update the screen once per month on my site and track the results for free on the right hand side of the site. Full results for all months can be viewed on the right side of Scott's Investments under "Micro Value Screen". The tool used for the screen is stockscreen123. No positions in stocks mentioned

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10 Micro Cap Value Stocks With Big Potential

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