Microcap growth is where investors go to get lied to get crushed.



 The stories are seductive, the revenue growth looks explosive, and the share prices can move just fast enough to convince people they are early rather than wrong. Most of the time, the outcome is predictable. Dilution, leverage, collapsing margins, and a quiet transfer of wealth from shareholders to management.



That does not mean microcap growth is broken. It means it requires a filter that most investors refuse to use.



Revenue growth by itself is useless. Anyone with a press release and a willingness to sell stock can manufacture growth for a few quarters. What matters is whether growth is strengthening the business or slowly poisoning it. That distinction is exactly where the Piotroski F-Score earns its keep.



The Piotroski framework, developed by Joseph Piotroski, was built to answer a simple question the market consistently ignores. Is the company actually getting better? Not louder. Not more promotional. Better.



It does this using nine blunt financial tests that cut through the nonsense. Are margins improving or shrinking? Is cash flow real or imaginary? Is leverage increasing or decreasing? Is the company funding its own growth or renting it from investors? These are not glamorous questions, which is why Wall Street routinely ignores them in favor of narratives and momentum.



That oversight is especially dangerous in microcaps. These stocks live in information deserts. Analyst coverage is thin. Liquidity is worse. Management teams control the narrative. When fundamentals improve, the market reacts late. When fundamentals deteriorate, the stock collapses before most investors even know what happened.



This is where combining revenue growth with the Piotroski F-Score creates a real edge.



Academic evidence supports it. Research examining growth stocks in the Eurozone found that financially strong growth companies, those with high Piotroski scores, produced strong positive market-adjusted returns over long periods. Financially weak growth stocks, those with low scores, delivered deeply negative returns.



The gap between the two was enormous, more than 20 percentage points per year in a market-neutral framework. That is not noise. That is the market systematically mispricing financial quality inside growth.



Right now, three names stand out as clearing both hurdles: Optex Systems Holdings (OPXS), Delcath Systems (DCTH), and Mama's Creations (MAMA). Different industries. Different risk profiles. Same underlying trait. These companies are growing and getting healthier at the same time.



Optex Systems Holdings, Inc. (NASDAQ:OPXS) operates in a corner of the defense market most investors never look at. The company designs and manufactures advanced optical sighting systems used in military and aerospace applications. This is not a hype driven defense name chasing buzzwords. It is a niche supplier with repeat demand, specialized products, and customers who care more about performance than marketing.



What makes OPXS interesting right now is the combination of rising revenue, expanding margins, and improving cash flow. Growth is not being forced through leverage or dilution. The balance sheet has been strengthening as operations scale. That is exactly what the Piotroski framework is designed to surface. Defense spending cycles can be lumpy, but when a microcap defense supplier shows margin discipline and financial improvement, the market usually notices late, not early.



OPXS fits the classic Under the Radar profile. Quiet business. Limited coverage. Improving fundamentals. These are often the most durable compounders in the microcap universe.



Delcath Systems, Inc. (NASDAQ:DCTH) is very different, and that is where investors need to stay disciplined. Delcath is an interventional oncology company focused on liver directed cancer treatments. This is not early stage science fiction. The company has an FDA approved therapy and is in the process of commercializing it for a serious unmet medical need.



Most biotech microcaps fail the Piotroski test immediately. Revenues are minimal. Cash burn is constant. Balance sheets deteriorate by design. Delcath is clearing the screen because it has moved beyond that phase. Commercial revenue is coming in. The business is transitioning from development to execution.



Mama's Creations, Inc. (NASDAQ:MAMA) is a reminder that microcap growth does not have to be exotic. The company produces fresh prepared foods sold through supermarkets, club stores, and other retail channels across the country. This is a distribution driven growth story, and those are often overlooked because they are not flashy.



MAMA has been expanding shelf space, adding doors, and growing revenue at a healthy clip. More importantly, it has been doing so while improving operating leverage and maintaining balance sheet discipline. Growth is translating into better economics, not just higher volume.



Consumer microcaps often get dismissed as too small or too competitive. That is a mistake when distribution momentum is real. Once a food brand secures national placement and proves it can execute, revenue growth can persist far longer than most investors expect.



The Piotroski screen helps separate brands that are scaling responsibly from those that are simply spending to stay visible.



Why These Names Matter What unites OPXS, DCTH, and MAMA is not narrative excitement. It is measurable improvement. Revenue is rising. Financial quality is improving. The businesses are earning the right to grow.



This is exactly where Under the Radar ideas come from. Not from chasing the loudest stories, but from identifying companies that are quietly getting stronger while the market is distracted elsewhere.



Microcap growth will always be volatile. That is the cost of admission. But volatility backed by improving fundamentals is very different from volatility backed by hope. One creates opportunity. The other creates regret.



Before anyone starts daydreaming about perfect back tests, a reality check is in order. Microcaps are not frictionless. Liquidity matters. Trading costs matter. Position sizing matters. Anyone who treats academic results as a promise instead of a signal will eventually pay tuition.



But the signal is the point.



Growth works when it is accompanied by improving fundamentals. Growth fails when it hides deterioration. The Piotroski F-Score does not predict the future. It tells you whether the present is improving or rotting. In microcaps, that distinction can be the difference between a multi-year compounder and a permanent capital impairment.



In my own process, revenue growth is the invitation. The Piotroski F-Score is the bouncer. Growth gets a company on the watch list. Financial strength determines whether it gets real capital. If a microcap is growing revenue while expanding margins, improving cash flow, and maintaining balance sheet discipline, it deserves attention. If it is growing revenue while issuing stock and levering up, it deserves skepticism, no matter how compelling the story sounds.



This is not theory. Piotroski's original work showed that financial statement analysis works best in smaller, underfollowed companies, exactly where most investors do the least amount of real work. That is where disciplined processes still matter and where emotional, narrative-driven investing still gets punished.



This framework fits cleanly into how I approach markets more broadly. I want value, I want momentum, I want trend, and I want credit working with me, not against me. In microcap growth, the Piotroski F-Score is the credit check. It is how you avoid funding other people's optimism with your own capital.



If you are serious about finding microcap growth stocks that can actually survive success, not just promote it, this combination belongs in your toolkit. Most investors will keep chasing stories. I am perfectly happy letting them do that while we focus on companies that are getting stronger quarter after quarter.



That discipline does not guarantee easy money. It does something better. It dramatically improves the odds, and over time, that is the only edge that matters.

OPXS

DCTH

The article discusses three microcap companies—Optex Systems Holdings, Delcath Systems, and Mama's Creations—that are demonstrating strong growth while improving their financial health. It emphasizes the importance of the Piotroski F-Score in evaluating these companies, as it helps identify whether growth is sustainable or merely superficial. Optex focuses on defense technology, Delcath on oncology treatments, and Mama's on prepared foods, all showing positive revenue trends and operational improvements, making them stand out in the often misleading microcap market.

Under the Radar: 3 Microcap Growers Passing a Tough Test