The Martin Zweig Growth Strategy: A Masterclass in Sensible Growth Investing
Investors who rely on crystal balls frequently wind up with crushed glass.
The Martin Zweig Growth Strategy: A Masterclass in Microcap Stocks Investing
Most investors think of "growth" and immediately imagine soaring valuations and sky-high risk. But Martin Zweig—Wall Street legend, investment newsletter pioneer, and one of the savviest market timers in history—married growth with something few associate with it:
Discipline.
Zweig's philosophy, outlined in his classic book Winning on Wall Street, blends three powerful ingredients: earnings momentum, valuation sanity, and market timing. In short, it’s growth at a reasonable price—with a side of smart trend-following.
Let’s break it down…
Zweig’s system filters for stocks showing strong earnings and sales growth, but not at any price. He was no fan of hype. Instead, he used the good old price-to-earnings (P/E) ratio to ensure he wasn’t overpaying.
But what truly set Zweig apart was his embrace of market timing—a taboo in many circles. He believed in aligning his portfolio with the prevailing market trend.
His famous quote says it all: “I’ve found that investors who rely on crystal balls frequently wind up with crushed glass.”
Zweig didn’t try to predict the future. He watched the market, tuned into its rhythm, and rode the wave while it lasted. And he didn’t just talk the talk. Between 1980 and 1995, Zweig’s newsletter returned an average of 15.9% annually—a rare feat.
The takeaway? You don’t need to choose between growth and discipline. With the right blend of momentum, valuation awareness, and macro insight, you can find undervalued microcap stocks that punch above their weight.
Three Microcap Stocks That Martin Zweig Would Love
1. Third Coast Bancshares, Inc.: A Quiet Texas Contender
Price: $30.21 (as of June 15, 2025)
P/E Ratio: 9.6
Market Cap: $308.10 million
Company Overview
Headquartered in Humble, Texas, Third Coast Bancshares operates 19 branches across three booming metro areas: Houston, Dallas-Fort Worth, and Austin-San Antonio.
Since its 2021 IPO, it has stuck to its fundamentals: commercial lending, disciplined credit, and organic growth. With $4.4 billion in assets and nonperforming loans at just 0.15%, it’s playing long-term ball, not chasing tech trends.
Why It Fits the Zweig Mold:
Quality:
10.2% ROE and 37.18% operating margin.
$50.9M TTM net income; 14.4% EPS growth forecast.
Value:
P/B ratio of 0.87, P/S of 2.36.
PEG of 0.8; price-to-free cash flow at 12.3.
Momentum:
+39.7% 1-year price change.
Analyst price target: $35.34 (~17% upside).
QVM Score: Quality: 60 | Value: 88 | Momentum: 67 | StockRank: 88
2. Great American Bancorp, Inc.: Micro-Cap, Maximum Discipline
Price: $57.00
P/E Ratio: 5.8
Market Cap: $15.12 million
Company Overview
Based in Champaign, Illinois, this micro-cap bank owns First Federal Savings Bank of Champaign-Urbana and has quietly built a fortress of financial prudence since 1995.
It doesn’t chase headlines. It simply delivers—with consistent profitability and a shareholder-first approach.
Why It Fits the Zweig Mold:
Quality:
15.5% ROE; 35.91% operating margin.
EPS growth: +131% in 2023, +54.4% in 2024.
Value:
P/B at 0.84; P/S at 1.52.
P/E of 5.8; strong free cash flow per share: $4.71.
Momentum:
+31.1% 1-year, +14.7% 6-month gain.
Dividend yield of 1.49%.
QVM Score: Quality: 88 | Value: 76 | Momentum: 75 | StockRank: 93
3. Jiayin Group Inc.: A Fintech Outsider With Big China Exposure
Price: $18.17
P/E Ratio: 5.1
Market Cap: $714.93 million
Company Overview
Shanghai-based Jiayin Group bridges underbanked Chinese consumers with lending partners. Since its 2019 IPO, it has focused on a platform model to reduce direct lending risk—smart in a highly regulated market.
For investors comfortable with emerging market risk, Jiayin offers genuine exposure to fintech-driven growth.
Why It Fits the Zweig Mold:
Quality:
ROE at 42.9%; ROC at 23.0%.
Operating margin: 24.12%; EPS up 96.3% YoY.
Value:
P/E of 5.1; P/S of 1.14.
High EPS growth with low valuation risk.
Momentum:
+179% in 6 months; +158% in one year.
Momentum Rank: 88; near 52-week high.
QVM Score: Quality: 54 | Value: 92 | Momentum: 88 | StockRank: 95
These microcap stocks don’t just align with Martin Zweig’s principles—they showcase the hidden gems still available to discerning investors. Growth with discipline isn’t just a theory. With the right filters, it’s a winning strategy.
Microcap Stocks FAQ
What makes microcap stocks attractive to growth investors?
Microcap stocks often fly under the radar, offering growth potential at more reasonable valuations. Investors can find early-stage companies with scalable business models before the market fully prices in their upside.
Are microcap stocks riskier than large-cap stocks?
Yes. Microcaps tend to have lower liquidity, less analyst coverage, and more volatility. However, with disciplined stock-picking—as advocated by Martin Zweig—investors can manage these risks effectively.
How can I screen for microcap stocks using the Zweig strategy?
Look for:
Strong earnings growth (10%+)
Reasonable P/E (under 20)
Positive price momentum
Low debt and solid ROE
Stocks aligned with market trends