Small-cap stocks yet to be siphoned off by institutional radars present excellent opportunities for savvy investors. Not to be fooled by daily volumes and earnings, some of these stocks have solid business interests and are backed by billions in funding. Watch these stocks for excellent yields going forward:
Golub Capital BDC, Inc (GBDC): With a new $75 million Senior Secured Revolving Credit Facility through its wholly owned subsidiary, Golub Captial has been in the business development business for debt and minority equity investment in the middle market. As this article suggests, the recent credit adjustments and prevailing weather-watch for changing interest rates actually works in favor for companies such as Golub, with an eye on equity portfolios that are established and likely to grow. Dividend per share payout has been on a steady path with the recent announcement of its fourth fiscal quarter dividend of $0.32 per share. As of June 30, 2011, it had investments in 99 portfolio companies with a total fair value of $438.9, which is a significant increase as compared to its third quarter ended March 31st 2011, with a total fair value of 389.1 million. Share price performance compares well with other players in its industry like Main Street Capital Corporation (MAIN), Ares Capital Corporation (ARCC), and Apollo Investment Corporation (AINV). This impressive performance is partly owed to its investment activities being managed by its investment adviser, GC Advisors LLC (GC Advisors).
Highwoods Properties, Inc (HIW) is a real estate investment trust (REIT) company that has under its belt three decades of operation, acquisition and development of rental real estate property, though recently it has realigned its focus on leasing, balance sheet management, expense management and an optimized capital stewardship. The company is on the path of recovery from the recession but is still able to maintain an impressive and ever growing portfolio. During the year ended December 31, 2010, the company had acquired office property in Memphis to the tune of 336,000 square feet plus an additional 32.6 acres of development land in Tampa. Economic conditions have not deterred the company from having a new addition to its portfolio (Lake Boone Medical Center). During the recession the company had a drop in net income from $90.75 million in 2007 to $31.99 million in the year 2008. Since then it has been on a steady path of recovery with its income slowly rising to $ 58.49 million in 2009 and $68.50 million in 2010. It has managed to maintain a $1.7 dividend per share with earnings per share of $ 0.76 trailing twelve months. The company owes its good performance to investment in single-tenant property which has remained somewhat stable even during the recession period.
Himax Technologies, Inc. (HIMX): Looking at the company’s financial releases, investors may be quick to push it aside due to its drop in revenue from $175 million in March 2010 to $141 million in March 2011. A closer look, however, will reveal the company shows signs of stability in a sector that has been experiencing a slow growth rate. This stability can be attributed to its ability to diversify smartly plus efficient management of its asset turn-over. The company offered a dividend of $0.24 per share against a gross margin of $148 million, which is not particularly bad given the current industry status. A semiconductor and display driver maker for desktop monitors, notebook computers and televisions, Himax Technologies has been shifting its focus into designing and marketing of display drivers for small and medium-sized TFT-LCD panels that are typically ten inches or below in diagonal measurement for consumer electronic appliances and CMOS image sensor products for mobile phone and notebook computer cameras as well as palm projectors, featuring the low-power, high-performance UltraBright technology. This presents an excellent opportunity for growth as sales of these devices typically continue to capture the fancy of consumers.
Fly Leasing Limited (FLY), just like the name suggests, is a global leasing company of modern, fuel-efficient commercial jet aircraft with a fleet of 60 aircraft that it leases under multi-year operating leases to 34 airlines in 23 countries, including the likes of British Airways and Qantas Airlines (QUBSF.PK). Formerly known as Babcock & Brown Air Limited “BBAM”, Fly Leasing is imminently among the world’s 15 largest plane leasers with its latest acquisition bringing the fleet count to 109, as the Wall Street Journal reports. Fly has, over the last two years, issued a dividend of $0.20 per share with a somewhat steady income rise. This company has managed to grow its net income from $2.3 million in 2007 to as much as $52.6 million in 2010, even in the wake of the crises prevailing in the industry with the recession and fuel price. The fuel crisis was particularly a weighing scale for the stability of most companies; even the bullish Air Lease Corp (AL) has not attained growth as steady as Fly. It has a unique ability to portray confidence even when the future seems bleak. The recent announcement by Fly to acquire the 49 aircraft confirms this phenomenon and this maybe their main business edge over the rest in its industry. At a PEG of 0.2, this one is a real value deal.
Genesis Energy, L.P (GEL) recently completed the previously announced $141 million acquisition of the shipping business Florida Marine Transporters and its affiliates (FMT), in addition to its portfolio of refinery-related plants and pipelines. Its main business concept is to provide an integrated platform where it offers transportation, storage and marketing services to gas producer refineries and other customers. The oil industry has in recent years been facing problems that range from stringent government regulations to unrest in the oil producing countries. Despite these issues in the sector, Genesis Energy has managed to increase its sales growth to 46.4% in 2010 against $2.1 billion revenue. This company also faces stiff competition from the likes of Plains All American Pipeline, L.P (PAA), but the company manages to counter competition due to its integrated services. Despite the negative profit margin trailing twelve months of 2.30%, the company issued annual revenue of $1.66. With over $1.5 billion market capitalization, investors may be eying the industry growth rate times two and cash rich earnings very soon.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.