The Debt/Equity Ratio illustrates how much debt financing a company uses in its capital structure. The higher this ratio is, the more a company is using debt to finance growth. The danger with a high Debt/Equity Ratio is that if the company’s “enhanced” earnings fail to outweigh the overall costs of debt financing, this can throw the company into peril.
A company’s 1-Year Fiscal Revenue Growth shows investors how well it has grown the top line over multiple periods of time. While one or two spectacular quarters may bring a pop to the stock, finding companies that illustrate a clear trend of growing revenue over a longer period of time are more likely to be rewarded. Given the constant fear of a slowing global economy, this metric can help indentify which companies may be weathering the storm better than others.
We ran a screen for small cap companies that have a low Debt/Equity Ratio (X<.5). From this narrowed pool we then screened for those that illustrated solid top-line growth (1-Year Fiscal Revenue Growth Rate>10).
The 1-Year Fiscal Revenue Growth Rate ranks the companies from highest to lowest:
1. Spreadtrum Communications, Inc (SPRD)
Sector | Technology |
Industry | Semiconductors |
Market Cap | $965M |
Beta | 1.44 |
The company designs and manufacturers processor solutions wireless communications market. The company’s 1-Year Revenue Growth Rate is 229.63. SPRD’s Debt/Equity Ratio is (TTM) is 0.02. The short interest was N/A as of 08/15/2011.
2. Power-One, Inc. (PWER)
Sector | Technology |
Industry | Electronic Components |
Market Cap | $732M |
Beta | 2.14 |
The company deals in power conversion and power management. The company’s 1-Year Revenue Growth Rate is 142.63%. PWER’s Debt/Equity Ratio is (TTM) is 0.10. The short interest was 36.40% as of 08/15/2011.
3. ReneSola Ltd. (SOL)
Sector | Technology |
Industry | Solar |
Market Cap | $264M |
Beta | 2.79 |
The company manufactures solar wafers. The company’s 1-Year Revenue Growth Rate is 136.20%. SOL’s Debt/Equity Ratio is (TTM) is 0.21. The short interest was N/A as of 08/15/2011.
4. Trina Solar Limited (TSL)
Sector | Technology |
Industry | Solar |
Market Cap | $900M |
Beta | 2.99 |
The company offers integrated solar-power products. The company’s 1-Year Revenue Growth Rate is 119.81%. TSL’s Debt/Equity Ratio is (TTM) is 0.31. The short interest was N/A as of 08/15/2011.
5. Yongye International, Inc. (YONG)
Sector | Basic Materials |
Industry | Agricultural Inputs |
Market Cap | $303M |
Beta | 1.68 |
The company develops and sells fulvic acid-based nutrient compounds. The company’s 1-Year Revenue Growth Rate is 118.25%. YONG’s Debt/Equity Ratio is (TTM) is 0.01. The short interest was 9.00% as of 08/15/2011.
6. Hanwha SolarOne Co Ltd. (HSOL)
Sector | Technology |
Industry | Solar |
Market Cap | $333M |
Beta | 2.52 |
The company is a manufacturer of both PV and cell modules. Its 1-Year Revenue Growth Rate is 99.22%. HSOL’s Debt/Equity Ratio is (TTM) is 0.19. The short interest was N/A as of 08/15/2011.
7. Suntech Power Holdings Co., Ltd (STP)
Sector | Technology |
Industry | Solar |
Market Cap | $789M |
Beta | 3.17 |
The company designs and manufactures a variety of PV cells and modules. The company’s 1-Year Revenue Growth Rate is 71.38%. STP’s Debt/Equity Ratio is (TTM) is 0.46. The short interest was N/A as of 08/15/2011.
8. Echo Global Logistics, Inc. (ECHO)
Sector | Industrials |
Industry | Trucking |
Market Cap | $285M |
Beta | N/A |
The company offers transportation and supply chain management services. Its 1-Year Revenue Growth Rate is 64.27%. ECHO’s Debt/Equity Ratio is (TTM) is 0.06. The short interest was 24.30% as of 08/15/2011.
9. Lattice Semiconductor (LSCC)
Sector | Technology |
Industry | Semiconductors |
Market Cap | $ 634M |
Beta | 1.81 |
The company designs and sells programmable logic software and products. The company’s 1-Year Revenue Growth Rate is 53.16%. LSCC’s Debt/Equity Ratio is (TTM) is 0.02. The short interest was 4.70% as of 08/15/2011.
We hope this list helps investors as they do their own due diligence on small cap companies.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
