10 Small Cap Earnings Growers

by: Scott's Investments
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-April to Mid-May portfolio returned -6.64% versus -5.77% for SPY and -3.77% for VBR, a small-cap value ETF, while the Mid-May to Mid-June returned .14% versus -1.93% on SPY and -4.48% on VBR. Mid-June to Mid-July was a disappointing period - the list returned an average of -6.40% versus -3.97% for VBR and -1.56% for SPY. 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 or less. 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). A couple of months ago I added a 200 day simple moving average requirement - stocks must be trading above their 200 day moving average in order to make the list. I use stockscreen123 as the screener.

The stocks on this list can be especially volatile given their low market capitalization, so please do proper due diligence. I find the list useful for gathering potential investment or trade ideas rather than a blanket "buy" list. Another option is to abandon this type of screen entirely when the underlying index is trading below its long-term moving average (such as the 200 day). As of 7/15/10, the Russell 2000 was trading just below the 200 day moving average. 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 Rank MktCap Industry
FINL The Finish Line, Inc. Here 99.49 797 Retail (Apparel)
GIII G-III Apparel Group, Ltd. Here 99 448.07 Apparel/Accessories
NSIT Insight Enterprises, Inc. Here 98.87 642.54 Computer Hardware
MDF Metropolitan Health Networks, Here 98.58 152.07 Healthcare Facilities
SCLN SciClone Pharmaceuticals, Inc Here 98.18 165.23 Biotechnology & Drugs
MEAS Measurement Specialties, Inc. Here 96.92 225.57 Scientific & Technical Instr.
UTI Universal Technical Institute Here 95.97 558.06 Schools
STKL SunOpta, Inc. (NYSE:USA) Here 95.46 303.86 Food Processing
NC NACCO Industries, Inc. Here 93.27 754.09 Misc. Capital Goods
RELL Richardson Electronics, Ltd. Here 93.12 166.36 Electronic Instr. & Controls

Disclosure: No positions