Best of 2011: Micro-Cap Stocks

Micro-cap stocks are small enough that many of them are typically forgotten by the average investor. But when picked right, micro caps can mean mega returns for investors. Here are three micro-cap stocks that made huge strides in 2011:

1. Acadia Healthcare Company (Nasdaq: ACHC)

Market Cap: $172.3 million

2010 Closing Price: $1.67

2011 Closing Price: $9.97

2011 Gains: 497%

Halloween was undoubtedly a treat for this provider of inpatient behavioral health care services. That was the day Acadia completed a merger with PHC, Inc. (AMEX: PHC) to become the country’s top provider of behavioral health care services based on licensed beds. The merger sent Acadia stock skyrocketing from $1.95 a share when the market closed on October 31 to $9.00 by the end of the day on November 1. The stock tacked on another 11% in gains over the final two months of the year to finish 2011 trading at nearly six times the price it started off with.

2. Edac Technologies (Nasdaq: EDAC)

Market Cap: $55.8 million

2010 Closing Price: $3.38

2011 Closing Price: $11.05

2011 Gains: 227%

Edac’s modest market cap is more than triple the microscopic $16.56 million it started the year with. The 60-year-old company is a supplier of aerospace products, and its stock is coming into its own after that sector took off in 2011. The company experienced strong sales growth last year, increasing year-over-year by 16% during the first nine months. It achieved record operating income in the third quarter by increasing its capacity to produce additional components for commercial and military aircraft engines. As a result Edac’s stock – so small that it received almost no Wall Street coverage prior to last year – is now fully on investors’ radar.

3. Saratoga Resources (AMEX: SARA)

Market Cap: $187.2 million

2010 Closing Price: $2.25

2011 Closing Price: $7.30

2011 Gains: 224.4%

This U.S. developer of crude oil and natural gas drilled two new wells, Catina and Roux, in 2011. Saratoga owns over 31,000 acres in Louisiana with reserves of 10.5 million barrels of crude oil. Now the company is in “advanced discussions” with McMoran Oil and Gas about a potential merger. Saratoga’s steady expansion has some analysts speculating that the company has become an attractive takeover candidate for big-oil companies. If so, Saratoga’s stock is likely to continue its upward trajectory.

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