3 Microcaps for Your Watchlist

The recent acquisition of Thorne by P&G for $3.8 B in cash places a spotlight on some key consumer spending trends and industry dynamics.

Thorne is a provider of nutritional supplements, vitamins, and wellness products with strong sales momentum highlighted by a sales CAGR of 30%+ since 2023. It generated $500 m in sales in 2025 with expectations for $650 m in 2026.

Large CPG’s like P&G are always on the look-out for acquiring companies in high growth verticals to invigorate their portfolio of consumer brands which, while steady, typically are in more mature stages of growth.

Thorne is capitalizing on the unique spending tendencies of Gen Z and millennials towards beauty and wellness. These generational cohorts, it is estimated, spend about 1.5x more on these types of products than the older consumer. About 60% of its sales are generated from consumers under 40 years of age.

This is quite a stark spending differential so it is worth investigating other companies connected with this demand trend in hopes of generating alpha.

Here we highlight 3 microcaps for your watchlist involved in this space. Each has a different operating model.

National Health Trends Corp. (NHTC) utilizes a subscription, direct to consumer model, and is focused primarily on the Hong Kong and China markets. While member churn and cash burn have kept us on the sidelines, its 75% Gross Margin and consistently high gross profit/assets ranking in our universe has piqued our interest.

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National Health Trends Corp. (NHTC) offers products across several distinct categories, including wellness, herbal, beauty, lifestyle and at-home tests. Its wellness portfolio includes dietary and nutritional supplements targeting joint health, immune support, heart health, digestive health and cellular health.

Healthy Choice Wellness Corp. (HCWC), meanwhile, is a bricks and mortar retailer operating natural and organic grocery stores and an online wholesale business offering vitamins, supplements, and health, beauty, and personal care products. Its segments include grocery and wellness and sales are more weighted towards grocery.

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Healthy Choice Wellness Corp. (HCWC) has been an active acquirer and operates 19 retail stores across 6 states. While operational consistency has proven challenging, the company is actively working towards rightsizing its cost structure and improving its operating cash flow.

Lastly, Natural Alternatives International, Inc. (NAII), provides private-label contract manufacturing services for vitamins, minerals, herbs, and other nutritional and health-care products to consumer brands worldwide.

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Sales grew 23% YOY in the March quarter but facilities remain underutilized following a concerted expansion and the company remains unprofitable, largely stemming from a 1.1% Gross Margin in the quarter.

If Natural Alternatives International, Inc. (NAII) can continue the sales momentum, the under absorption of fixed assets should gradually improve resulting in better profitability metrics.

Regardless, all 3 microcaps are tangentially linked to a growing space with unique, sustainable demographics and are worth following for evidence of operational execution. And perhaps most importantly, their products have caught the attention of large consumer packaged goods players.

 

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This article originally published on Zacks Investment Research (zacks.com).

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