Microcaps With Gross Margin Catalysts

Zacks’ microcap screening framework highlights Gross Profit/Total Assets, also known as the Marx ratio, as a tool to evaluate small stocks without relying on analyst estimates. Using that approach, the article spotlights two microcaps with catalysts aimed at improving material gross profit. Champions Oncology, Inc. (CSBR) reported gross margin falling to 47% from 61% a year earlier, as the cost of oncology revenues rose 33.5% to $8.8 million. Management attributed the decline to more than $2 million in outsourced radiolabeling and the absence of prior-year data licensing revenue, while expecting margin improvement as radiolabeling work transitions in-house. The stock is noted as screening very high on its Marx ratio, though Zacks maintains a Neutral stance pending evidence of revenue growth. Capstone Energy+ (CEPL) improved gross margin to 30.1% from 27.8% and highlighted a design-for-manufacturing initiative that reduced the production cost of its microturbine engine module frame by 59%, lowering unit cost from $1,212 to $413 without compromising quality. Zacks currently rates CEPL Outperform.