MICRO CAP STOCKS TO WATCH 2016 UPDATE
MICRO CAP STOCKS TO WATCH 2016 TRIAL

Capstone's promise was never fulfilled, and shares eventually lost more than 95% of their value as the company kept selling shares to stay afloat. Its micro-turbines promised a great deal of flexibility for onsite power in remote areas, and could also serve as a backup source in the event of blackouts. Roughly a decade ago, this company was expected to revolutionize the power-generation industry.

MICRO CAP STOCKS TO WATCH 2016 UPDATE

Look for an update from management in mid-March. And the ultimate value for this company may exceed 0 million if DSC-127 is a hit, representing more than 100% upside. Still, with ample cash on hand, and further intra-trial updates, this stock is likely to land on many more investor radars this year.

MICRO CAP STOCKS TO WATCH 2016 TRIAL

Phase III clinical trials won't be fully enrolled for another 12 months, and trial data won't likely be released until the second half of 2015. The real catalyst here is DSC-127, which will require some patience.

The good news: Some of those funds will also be used to expand a sales force that is focused on existing products and to give Derma the resources to make acquisitions. The drug development process is so costly that the company recently found it necessary to dilute shareholders by raising more than million in fresh capital. Unfortunately, thought that core business has been nicely profitable, Derma Sciences is spending heavily to develop a potentially game-changing wound-healing drug known as DSC-127, leading to overall losses instead of profits. Sales have grown from million in 2009 to million in 2012, and should exceed million this year, according to management. This micro-cap has built a healthy business in the wound care market, selling ointment-laced bandages that help to speed healing. If you invested $3,000 in each of those three stocks at that time, you'd be sitting on a tidy 45% gain. The other two stocks in that September article bear out that premise: Novavax (Nasdaq: NVAX ) is up 77% since my profile, and Lionbridge Technologies (Nasdaq: LIOX ) is up 86%. Placing too many funds in just one micro-cap stock is too risky. That's why you need to take a basket approach to micro-caps. I still think Merge is an intriguing health care opportunity, but clearly my enthusiasm was premature. Case in point: I suggested back in September that Merge Healthcare (Nasdaq: MRGE ) could double in value, but MRGE has fallen 27% since then. Micro-caps can also shed value at a rapid pace, especially if the market loses steam. Of course, with such potential reward comes risk. Caught off guard, investors can push such stocks up by 50% or even 100%. Micro-caps tend to toil in anonymity - right up until the time they deliver great news. No area is as ripe for such upside as micro-cap stocks, which typically have market caps between $50 million and $200 million.

These are the kinds that can deliver gains in one year that many other stocks take a decade to achieve. Over the past few weeks, I've been chatting with my colleague and StreetAuthority's Managing Editor, Bob Bogda, about the potential for home run stocks.

Micro cap stocks to watch 2016