Small-cap stocks have long been valued by savvy investors who understand that allocating to a less-efficient market segment can improve a portfolio's risk/return profile.
The same and more can be said about so-called micro caps — the low market cap segment that active traders tend to avoid. "Sebastian," an anonymous micro-cap stock investor and enthusiast who is active on Substack and Twitter, has been doing research on four microcap restaurant stocks that are trading at potentially attractive values.
- Ark Restaurants Corp ARKR through its subsidiaries, owns and operates 17 restaurants and bars across the U.S. The company’s market cap is $60.4 million. The lands it owns are worth roughly $25 million, Sebastian says. It also owns 8% of Meadowlands Racetrack in New Jersey, which will potentially be awarded a casino license. If Meadowlands receives a casino license, the revenues generated could be worth more than Ark’s entire market cap.
- Good Times Restaurants Inc. GTIM is a regional chain of quick-service restaurants located primarily in Colorado. It owns two concepts: Good Times Drive Thru and Bad Daddy’s Burger Bar. The company’s market cap is $30.5 million, and it currently has a $5 million share buyback program in place.
- Tortilla Mexican Grill PLC MEX, with a market cap of £40.60 million ($49.3 million), operates and manages Mexican restaurants under the Tortilla brand. The company recently announced that it was highly resilient throughout 2022 despite ongoing macro headwinds. It claims revenues rose 20% year-over-year to £57.7m ($70.1 million), driven by the ongoing strength of its customer proposition and demand for its sector-leading brands, as well as the continued expansion of its site portfolio.
- Flanigan's Enterprises, Inc. BDL operates as a chain of small cocktail lounges and packaged liquor stores throughout Florida. It has a market cap of $50.9 million, with $32 million in cash on its balance sheet. The stock is currently trading around a 52-week low.
Benzinga's Take: Readers should understand that there's a significant risk in trading any stock, let alone ones that have a market cap below $100 million. Therefore, there's a need for careful in-depth research.
Read next: Airline Stocks Are Rallying In 2023, Even With Travel Chaos: What Happens Next?
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