We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here we highlight 2 stocks from our microcap research universe that appear undervalued based on recent operating momentum and supported by 5-year valuation analysis.
Texas Community Bancshares, Inc. (TCBS - Free Report) is a bank holding company headquartered in Mineola, Texas. The company conducts all of its operations substantially through its wholly owned subsidiary, Broadstreet Bank, a Texas-chartered savings bank.
Image Source: Zacks Investment Research
Texas Community Bancshares, Inc. (TCBS - Free Report) operates primarily in East Texas through its main office and six branch locations serving Wood, Van Zandt, Smith, Franklin, and Hopkins counties and surrounding areas.
In Q2, EPS grew 52% YOY to $.35 primarily due to loan and deposit growth accompanied by YOY NIM improvement of 60 bps to 3.69%. Noninterest-bearing deposits increased to $51.3 million from $45.9 million, reducing reliance on costlier wholesale funding.
Please note that NIM in Q3 of 2025 was 3.22% while NIM for all of 2025 was 3.26%, so YOY NIM improvement for the next 2 quarters appears possible.
The stock is currently trading at 0.89X trailing 12-month P/B TTM, which compares to 1.82X for the Zacks sub-industry, 4.42X for the Zacks sector and 7.29X for the S&P 500 index.
Over the past five years, the stock has traded as high as 1.07X and as low as 0.60X, with a 5-year median of 0.90X. There are currently no intangible assets on the balance sheet.
We believe there is room for multiple expansion. FHLB borrowing exposure and increased credit stress are the main risk factors.
The other microcap valuation play takes us into the world of coffee. Is coffee demand inelastic? There is academic research to support this beyond just our anecdotal coffee addiction.
Image Source: Zacks Investment Research
Coffee Holding Co., Inc. (JVA - Free Report) is an integrated wholesale coffee roaster and dealer engaged in sourcing, roasting, blending, packaging and distributing coffee products, including wholesale green coffee, private label coffee and branded coffee.
It’s important to note that Coffee Holding Co., Inc. (JVA - Free Report) strategically elected not to pass on tariff costs back in 2025. This enabled customer retention as well as new customer acquisition.
Even though the July Q3 sales declined 9.3% due to lower selling prices, operating income increased to $2.3 m YOY from ($1.1 m) as Gross Margin improved to 25% from 9.4%.
Trading gains, tariff refunds, and lower priced inventory contributed to the improvement of Gross Margin. The company expects additional tariff refunds over the next 2 quarters.
The stock is currently trading at 3.35X trailing 12-month EV/EBITDA TTM, which compares to 21.03X for the Zacks sub-industry, 34.88X for the Zacks sector and 18.22X for the S&P 500 index.
Over the past five years, the stock has traded as high as 22.28X and as low as -32.74X, with a 5-year median of 6.65X.
As a testament to possible undervaluation, the company recently announced a share repurchase for $2.5 m which equates to nearly 10% of its market cap.
Customer concentration and a volatile commodity market are the primary risk factors.
Image: Bigstock
2 Outperform Microcaps that Look Undervalued
Key Takeaways
Here we highlight 2 stocks from our microcap research universe that appear undervalued based on recent operating momentum and supported by 5-year valuation analysis.
Texas Community Bancshares, Inc. (TCBS - Free Report) is a bank holding company headquartered in Mineola, Texas. The company conducts all of its operations substantially through its wholly owned subsidiary, Broadstreet Bank, a Texas-chartered savings bank.
Image Source: Zacks Investment Research
Texas Community Bancshares, Inc. (TCBS - Free Report) operates primarily in East Texas through its main office and six branch locations serving Wood, Van Zandt, Smith, Franklin, and Hopkins counties and surrounding areas.
In Q2, EPS grew 52% YOY to $.35 primarily due to loan and deposit growth accompanied by YOY NIM improvement of 60 bps to 3.69%. Noninterest-bearing deposits increased to $51.3 million from $45.9 million, reducing reliance on costlier wholesale funding.
Please note that NIM in Q3 of 2025 was 3.22% while NIM for all of 2025 was 3.26%, so YOY NIM improvement for the next 2 quarters appears possible.
The stock is currently trading at 0.89X trailing 12-month P/B TTM, which compares to 1.82X for the Zacks sub-industry, 4.42X for the Zacks sector and 7.29X for the S&P 500 index.
Over the past five years, the stock has traded as high as 1.07X and as low as 0.60X, with a 5-year median of 0.90X. There are currently no intangible assets on the balance sheet.
We believe there is room for multiple expansion. FHLB borrowing exposure and increased credit stress are the main risk factors.
The other microcap valuation play takes us into the world of coffee. Is coffee demand inelastic? There is academic research to support this beyond just our anecdotal coffee addiction.
Image Source: Zacks Investment Research
Coffee Holding Co., Inc. (JVA - Free Report) is an integrated wholesale coffee roaster and dealer engaged in sourcing, roasting, blending, packaging and distributing coffee products, including wholesale green coffee, private label coffee and branded coffee.
It’s important to note that Coffee Holding Co., Inc. (JVA - Free Report) strategically elected not to pass on tariff costs back in 2025. This enabled customer retention as well as new customer acquisition.
Even though the July Q3 sales declined 9.3% due to lower selling prices, operating income increased to $2.3 m YOY from ($1.1 m) as Gross Margin improved to 25% from 9.4%.
Trading gains, tariff refunds, and lower priced inventory contributed to the improvement of Gross Margin. The company expects additional tariff refunds over the next 2 quarters.
The stock is currently trading at 3.35X trailing 12-month EV/EBITDA TTM, which compares to 21.03X for the Zacks sub-industry, 34.88X for the Zacks sector and 18.22X for the S&P 500 index.
Over the past five years, the stock has traded as high as 22.28X and as low as -32.74X, with a 5-year median of 6.65X.
As a testament to possible undervaluation, the company recently announced a share repurchase for $2.5 m which equates to nearly 10% of its market cap.
Customer concentration and a volatile commodity market are the primary risk factors.