Stocks: A Dozen Mighty Microcaps

Ben Steverman

In the past year, the stock market has not been kind to diminutive companies. The Russell Microcap index, which consists of 2,000 of the U.S.'s tiniest publicly traded companies, dropped 8% in 2007, and has plummeted an additional 13% since the start of the year.

Definitions can vary, but generally microcap stocks are the smallest of the small. If small-cap stocks have stock market values of less than $2 billion, microcaps are even tinier, often with market capitalizations of less than $350 million. The average firm in the Russell Microcap index is valued at $290 million, and range from $24 million to $750 million. Put together, all 2000 microcaps in the index make up less than 3% of the total U.S. equity market.

Recently, the microcaps' tide may have turned. Hundreds of beat-up microcap stocks surged higher in the past month, lifted by falling oil prices, better-than-expected earnings, and hopes that financial stocks may have hit bottom.

In July the Russell Microcap index rose 4.65%. Meanwhile, the broad Standard & Poor's 500-stock index was flat and the large-cap Russell 1000 index fell 1.16%. Microcaps outperformed every broad Russell index, a trend that seems to have continued in August.

Small stocks are volatile and risky, so there's no guarantee that the microcaps' recent run will continue. But here are 12 of the past month's top-performing smaller stocks.

(Data and descriptions are courtesy of data provider Capital IQ, which, like BusinessWeek, is a unit of the McGraw-Hill Companies.)