Three Small Cap Stocks on the Verge of Breakouts

The market continues its bull ran as the DOW ran to new recent highs Monday to close at 10,090. As the market continues to rally more and more bullish stock chart setups are popping up on my scanners. Here are 3 stocks that haven't yet broken out from their chart patterns but all have great potential if these trigger prices are hit to spark the breakout momentum.

Small Cap Stock Pick GSI:

BUSINESS SUMMARY

General Steel Holdings Inc., through its subsidiaries, operates a portfolio of steel companies serving various industries primarily in the People's Republic of China.

Current year EPS: .28
Next year EPS: .57
+103% estimated growth

Current year revenue: 1.64b
Next year: 2.24b
+36.6% estimated growth.

Forward P/E: 7.61x
Industry P/E: 16.82x

Fous Fair Value: 9.58
Current share price: 4.34
+120% upside potential

Technical Analysis:

Small Cap Stock Pick ARM:

BUSINESS SUMMARY

ArvinMeritor, Inc. supplies a range of integrated systems, modules, and components to commercial truck, light vehicle, trailer, and specialty original equipment manufacturers, as well as various after markets worldwide.

Current year EPS: -1.45
Next year EPS: .38
Strong estimated growth

Current year revenue: 4.5b
Next year: 4.64b
+3% estimated growth.

Forward P/E: 23.89x
Industry P/E: 31.43x

Fous Fair Value: 11.94
Current share price: 9.08
+32% upside potential

Technical Analysis:

Small Cap Stock Pick EROC:

BUSINESS SUMMARY

Eagle Rock Energy Partners, L.P., together with its subsidiaries, engages in gathering, compressing, treating, processing, transporting, and selling natural gas, as well as in fractionating and transporting natural gas liquids (NGL)

Eagle Rock Energy has been making some bold moves along with the rest of the oil/gas market as this month they received an upgrade from Wells Fargo as well as a buy out offer from Black Stone Minerals:

Oct 19 (Reuters) – Natural gas company Eagle Rock Energy Partners LP (EROC.O) said Black Stone Minerals Co LP and its co-investors offered to buy Eagle Rock’s minerals business for $157.5 million.

Eagle Rock said its board was reviewing the proposal.

The proposal includes an offer to provide a standby equity investment commitment in support of a public equity offering by Eagle Rock, the company said in a statement.

Eagle Rock’s shares closed at $4.64 Friday on Nasdaq. (Reporting by Arundhati Ramanathan in Bangalore; Editing by Vinu Pilakkott).

Technical Analysis:

Comments

[John Mylant:]

I like EROC for a break up far better than I do the other stocks. I read it has received a proposal from Black Stone Minerals Company to purchase its minerals business for $157.5 million and to provide a standby equity investment commitment in support of a public equity offering by the partnership. Good technical's & good financials.

John Mylant
mylantsmoneyblog.typep.../

Oct 20 01:57 PM

[Cameron Fous:]

GSI, ARM, and EROC all bustin loose!

Oct 21 10:56 AM

[satyr:]

S&P upgraded ARM today to "buy", with a target of $11 on anticipated improved earnings for FY10. However, against a backdrop of today's falling market in last inning, the stock was only able to eke out a 1 cent gain. It did hit a new 52-week intraday high and I think the case can be made for further gains.

Oct 21 04:23 PM

[Cameron Fous:]

ya satyr i went long in GSI today and sold shortly after in the sell off. both GSI and ARM have positive fundamentals but the technicals on the charts were pretty weak into the close - The DOW Takes it Hard From Behind in Final Hour and Closes Below 10k. Is OctoberLUVfest Over?: October like mos.. bit.ly/pcXez

Oct 21 06:42 PM