4 Small Cap Stocks With High Growth and Strong Profits

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 |  Includes: CYBX, DHX, GLDD, RBCN
by: Kapitall

To construct this list we looked for stocks with a market cap between $300M - $2B, 5-year projected EPS growth above 25% and current average daily volume above 200K shares. To narrow down the list, we focused on those that were beating their industry averages on the following metrics of profitability:

  • Growth Margin
  • Operating Margin
  • Pretax Margin

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

Considering this information, which of these stocks do you believe will outperform the market and which are bound to continue underperforming it?

1. Cyberonics Inc. (NASDAQ:CYBX): Medical Appliances & Equipment Industry. Market cap of $925.63M. 5-year EPS growth rate at 26.58%. Gross margin at 89.49% vs. industry average at 65.58%. Operating margin at 25.87% vs. industry average at 18.1%. Pretax margin at 25.32% vs. industry average at 13.63%. The stock is a short squeeze candidate, with a short float at 6.08% (equivalent to 10.97 days of average volume). The stock has gained 83.22% over the last year.

2. Dice Holdings, Inc. (NYSE:DHX): Staffing & Outsourcing Services Industry. Market cap of $983.98M. 5-year EPS growth rate at 31.6%. Gross margin at 92.86% vs. industry average at 67.34%. Operating margin at 27.16% vs. industry average at 23.8%. Pretax margin at 23.2% vs. industry average at 13.11%. This is a risky stock that is significantly more volatile than the overall market (beta = 2.35). The stock has performed poorly over the last month, losing 19.42%.

3. Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD): Heavy Construction Industry. Market cap of $356.98M. 5-year EPS growth rate at 32.7%. Gross margin at 22.68% vs. industry average at 12.11%. Operating margin at 9.49% vs. industry average at 5.23%. Pretax margin at 6.28% vs. industry average at 4.33%. The stock is a short squeeze candidate, with a short float at 6.51% (equivalent to 8.17 days of average volume). The stock has performed poorly over the last month, losing 18.52%.

4. Rubicon Technology, Inc. (NASDAQ:RBCN): Semiconductor Industry. Market cap of $528.54M. 5-year EPS growth rate at 26.67%. Gross margin at 65.18% vs. industry average at 58.84%. Operating margin at 45.88% vs. industry average at 25.13%. Pretax margin at 46.0% vs. industry average at 24.6%. The stock is a short squeeze candidate, with a short float at 39.24% (equivalent to 11.9 days of average volume). The stock has performed poorly over the last month, losing 19.54%.

*Data sourced from Fidelity and Finviz

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.