Looking recently over the 2013 Forbes' 100 Best Small Companies list, I realized that there are a *lot* of them currently screened by us! In fact, there are 10 that currently show up in one of the official screens:
- Questcor Pharmaceuticals (QCOR) - ranked #1
- Sturm, Ruger & Co (NYSE:RGR) - ranked #5
- Cirrus Logic (NASDAQ:CRUS) - ranked #7
- American Public Education (NASDAQ:APEI) -ranked #12
- Synaptics (NASDAQ:SYNA) - ranked #19
- j2 Global (NASDAQ:JCOM) - ranked #40
- Myriad Genetics (NASDAQ:MYGN) - ranked #49
- NeuStar (NYSE:NSR) - ranked #57
- Liquidity Services (NASDAQ:LQDT) - ranked #79
- Select Comfort (NASDAQ:SCSS) - ranked #87
In addition, another 2 companies - Medifast (NYSE:MED) (#16) and Lindsay Corp (NYSE:LNN) (#60) - show up in our alternative MFI-style screens. And RF Industries (NASDAQ:RFIL) (#46) was a part of MFI (and a Top Buy pick) before its recent run-up. That's a nice basked of small-cap, growing, value-priced stocks to dig into! After taking a look at each of them, here are 5 that could be interesting for a closer look:
Cirrus Logic is a semiconductor company, focusing on audio components for smartphones and tablets (90% of the business), and components for LED retro-fitting to traditional sockets. With an EBIT/Enterprise value earnings yield of 22%, a debt-free balance sheet, and 5-year compounded annual growth rate (CAGR) of almost 38% in sales, the numbers are enticing. The recent drop from nearly $26 to the $19's was due to a report that Cirrus had lost the audio amp slot in Apple's (NASDAQ:AAPL) iPad Air, with the fear being the loss of more Apple business, which accounts for over 80% of Cirrus' revenues. Still, one would think management was already aware of this loss when they recently raised guidance after Q2 earnings.
American Public Education
While regulatory issues and plummeting enrollment have crushed most for-profit education providers over the past several years, APEI has continued to grow enrollment, revenues, and profits. APEI offers online-only courses to military and public service (police, fire, etc.) members. With a 20% 4-year CAGR in sales (15% in operating earnings), debt-free balance sheet, and an 11.4% earnings yield, the stock looks to offer substantial quality at a very reasonable value.
Similar to Cirrus Logic is Synaptics, which produces touchscreens for mobile products (smartphones, tablets, GPS, etc. - 70% of sales) and PC applications (touch pads, mice, etc.). Synaptics supplies much of the non-Apple device market, with some key wins being Samsung's Galaxy line and Amazon's Kindle Fire. Sales were up 21% in fiscal (June) 2013, and soared 75% in the most recent quarter. The growth opportunity remains large here, with touchscreens a viable control solution for almost any electronic application. Synaptics has a lot of cash ($332 million), almost no debt, a good market position, and recently entered the fingerprint ID arena. The 10.6% earnings yield seems more than reasonable for this kind of growth potential.
NeuStar runs a bunch of interesting services, including management and assignment of area codes and telephone numbers, sole registrar for .biz, .us, .co, .tel, and .travel Internet domains, text messaging short codes registration ("text 12345 to vote!"), operating the DRM for the UltraViolet digital entertainment system, and various information and identification services. NeuStar has growth (19% 3-year CAGR in sales), robust and predictable free cash flows, "sticky" services, and a decently cheap 9% earnings yield. This is a business to buy and hold for the long term.
Lindsay Corp makes mechanized irrigation systems for farming. There are a lot of things to like here - mechanized systems continue to gain market share in the U.S., the international opportunity is almost completely un-penetrated, and Lindsay is currently just one of two major providers [with Valmont (NYSE:VMI)]. Emerging economies bring increased food and meat demand, which leads to increased framing activity, which in turn creates demand for Lindsay's systems. For a deep dive on the company, check out this outstanding research. At a downright cheap 12.5% earnings yield, you get this story at a bargain valuation as well.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.