Seeking Alpha
Independent research, long/short equity, dividend investing, ETF investing
Profile| Send Message|
( followers)  

Below is a list of 10 small cap value earnings surprise stocks for the next 30 days. Last month's portfolio can be seen here. The Mid-February to Mid-March portfolio returned over 15%, but last month's portfolio lagged. The March 15 to April 15 portfolio returned 2.07% versus 5.26% for SPY. The primary reason the portfolio lagged was OTCPK:FUQI returned -39.15%. Since the portfolio is passive (I assume no stop losses are placed) these outliers are a possibility. Take away FUQI and the portfolio's returned jumped to 8.19%. Returns exclude dividends, slippage, and commission.


My screen looks for a low PEG, recent earnings surprises, a minimum volume requirement, and small market capitalization. I exclude OTC stocks and I further narrow the list based on additional fundamental factors to 10 stocks. The list, as always, is not a specific portfolio but a recommendation for further research. Since this is a purely mechanical screen, I play no discretion in the results (other than establishing the original screen criteria). As a result, FUQI remains on this month's list. FUQI shares dropped last month when they slashed projected earnings. However, since they have not yet announced this quarter's earnings, they "technically" still have a history of earnings surprises. My guess is we won't see FUQI on next month's list. This is a good example of why someone should use this list as a starting point for further research, not a blanket "buy" list.

As a way around this "FUQI-ed up" situation, one method for narrowing the list further is to require the stocks also be above the 200 day simple moving average. Adding this requirement helps prevent stocks from making the list which have fallen above long-term averages for various reasons between earnings reports. The second list is the results with the 200 day requirement.

The stocks on this list can be especially volatile given their low market capitalization, so please do proper due diligence. The current lists of stocks are below and returns can be tracked real--time on the right hand side of Scott's Investments:


Ticker Name Trend Analysis Last MktCap
AEA Advance America, Cash Advance Here 6.56 407.88
OTCPK:FUQI Fuqi International, Inc. Here 11.63 321.32
SCVL Shoe Carnival, Inc. Here 26 338.16
CNU Continucare Corporation Here 3.53 211.65
SORL Sorl Auto Parts, Inc. Here 10.46 201.93
NSIT Insight Enterprises, Inc. Here 16.16 742.93
BIOS BioScrip Inc. Here 9.46 376.46
HITK Hi-Tech Pharmacal Co. Here 24.05 297.55
DM Dolan Media Company Here 10.92 331.14
RELL Richardson Electronics, Ltd. Here 9.89 174.47

Ticker Name Trend Analysis Last MktCap
AEA Advance America, Cash Advance Here 6.56 407.88
SCVL Shoe Carnival, Inc. Here 26 338.16
CNU Continucare Corporation Here 3.53 211.65
SORL Sorl Auto Parts, Inc. Here 10.46 201.93
NSIT Insight Enterprises, Inc. Here 16.16 742.93
BIOS BioScrip Inc. Here 9.46 376.46
HITK Hi-Tech Pharmacal Co. Here 24.05 297.55
RELL Richardson Electronics, Ltd. Here 9.89 174.47
KFRC Kforce Inc. Here 15.35 603.75
STKL SunOpta, Inc. (NYSE:USA) Here 4.61 299.57

Disclosure: No Positions

Source: 10 Small Cap Earnings Growers