We recently compiled a list of the 10 Best Micro Cap Stocks to Buy Now. In this article, we are going to take a look at where Taylor Devices, Inc. (NASDAQ:TAYD) stands against the other micro cap stocks.
Just as we overlook loose change, micro-cap stocks are often ignored for larger, more dominant enterprises. Investors trying to play safe ignore the fact that every strong stock was once a micro-cap stock. This niche segment of the market offers higher risk and, if successful, higher returns, particularly present in emerging industries where there is potential to outperform peers.
This leads us to the basic definition of micro capitalization — stocks are considered micro-cap if the market capitalization of publicly traded companies is less than $250 million. Few analysts and institutions cover these stocks, and mainly operate under the radar. The basic features involve earlier stages of development, more volatility, and significant liquidity constraints. Best suited for investors with high tolerance, these stocks are vulnerable to market manipulation, debt levels, price swings, and greater regulation and legislation. So, one might ask: what’s in it for me?
With the Russell small-cap index soaring last year, mega-cap stocks mainly stayed behind the scenes. Various studies highlight that micro-cap stocks generate additional shareholder value, even after making risk adjustments. Apart from the 2007-08 financial crisis, micro- or small-cap stocks have generally outperformed large-cap stocks. A report by Oberweis Asset Management outlines that micro-caps generate higher returns than small-cap stocks as they behave differently from other asset classes, particularly when coming out of economic stagnation.
Most analysts have a positive stance on investing in these small stocks with big returns. For instance, Saxo Group, in their article on micro-cap stock made the following comment:
“Micro-cap stocks can provide substantial upside because they represent companies in the earlier stages of development. With fewer investors, micro-caps have greater room to grow as they expand operations and gain recognition in their industry.”
Underestimating these stocks results in a missed opportunity and is reflected in an old saying: “A day late and a dollar short.” It is essential to realize the potential of these stocks to fully capitalize on the company’s revenue growth.
The advocacy for micro-cap stocks is stronger now more than ever, with monetary policy easing, Trump’s pro-business approach facilitating mergers and acquisitions, attractive valuations, and reshoring trends.
Boston Partners, in their white paper, wrote:
“Historical analysis shows that over time, actively managed, value-oriented micro-cap funds tend to outperform private equity.”
Thus, with low price valuations by the investors, these stocks will continue to offer returns that surpass the returns from private equity fund investments. In view of this, we will take a look at some of the best micro cap stocks to invest in.
Our Methodology
In this article, we have considered the 10 best microcap picks, arranged in ascending order according to their market capitalization, that have the potential for growth, given the market potential and successful mergers and acquisitions. Spread across a range of industries, from biopharma to AI, these stocks have a story to tell. The companies listed are mostly in their early stages of development, so they have upside potential. Although price volatility is high, these micro-cap stocks extend opportunities to investors willing to accept greater uncertainty for growth prospects. The stocks are ranked in ascending order of their market cap, as of March 4, 2025.
At Insider Monkey, we are obsessed with hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A close-up of a specialized machine in an industrial setting, showing its intricate inner workings.
Taylor Devices, Inc. (NASDAQ:TAYD)
Market Capitalization: $101.064 million
Taylor Devices, Inc. (NASDAQ:TAYD) is a New York-based powerhouse involved in the design, development, and marketing of shock absorption, rate control, and energy storage devices for use in capital equipment. The core offerings of the company include Seismic dampers, Fluidicshoks, Crane and industrial buffers, and Vibration Dampers. With over 60+ years of experience in the shock and vibration control field, the company offers its products to a diverse range of industries, including defense, automotive, industrial, bridges, and steel.
Interestingly, the stock has delivered over 200% returns over five years, which makes it one of the best micro cap stocks. The reason is that TAYD is a debt-free and low-competition stock. With returns on its assets higher than 91% of its sector and EBITDA margins above 83% of the sector, TAYD can be considered unmatched. Tim Sopko, Chief Executive Officer of Taylor Devices, Inc. (NASDAQ:TAYD) made the following comment about the company’s performance:
“As we enter the 2nd half of our FY25, we will continue to aggressively target opportunities where our custom-engineered products are critically needed and valued by our customers in all three of our chosen markets; Aerospace/Defense, Structural, and Industrial, which we expect will continue to support our profitable growth going forward.”
While the gross margin stands at 47%, the profit margin is reported to be approximately 20%. Taylor Devices, Inc. (NASDAQ:TAYD) is currently in a robust financial state with the potential to withstand demand slumps, and the debt-free characteristic of TAYD further underscores its strong footing in this very capital-intensive nature of the industry.
Overall TAYD ranks 5th on our list of the best micro-cap stocks to buy now. While we acknowledge the potential for TAYD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than TAYD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stock To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
