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Some of the following small cap names offer tremendous growth potentials as their PEG ratios hover close to 1. As I find P/E and P/S ratios very volatile when trying to assess small cap securities, I concentrate more on ratios that encapsulate these stocks as financially sound: price-to-book, price-to-cash, return on equity, and debt-to-capital.

It is noteworthy to mention that as with most ratios, it is useful to compare them within their industries. In addition, very low price-to-book ratios could also signal that something could be fundamentally wrong with a company or there are relatively low barriers for new entrants.

Company Name PEG Ratio Price/Book Price/Cash ROE Debt/Capital
A.O. Smith Corp. (AOS) 1.2 1.7 11.8 10.09% 27.91%
Bank of Hawaii Corp. (BOH) 1.5 1.9 10.4 16.08% -
Casey's General Stores (CASY) 1.7 3.9 9.5 14.90% 60.72%
Lithia Motors, Inc. (LAD) 0.5 1.1 6.9 9.38% 64.42%
LifePoint Hospitals, Inc (LPNT) 1.1 0.9 5.5 8.30% 44.11%
MKS Instruments, Inc. (MKSI) 0.4 1.3 7.4 17.32% 0.06%
Minerals Technologies, Inc. (MTX) 2.1 1.2 7.3 8.56% 10.73%
99 Cents Only Stores (NDN) 1.3 1.9 12.8 11.38% 0.07%
Novellus Systems, Inc. (NVLS) 0.7 1.9 5.7 28.36% 9.73%
Olin Corporation (OLN) 0.4 1.5 4.9 23.14% 37.11%
Plantronics, Inc. (PLT) 0.9 2.4 11 19.44% 0.00%
Portfolio Recovery Associates (PRAA) 0.8 2.1 11 17.72% 31.08%
Superior Industries International (SUP) 0.1 1.0 5.1 13.58% 0.00%
Trustmark Corporation (TRMK) 1.4 1.1 9.5 9.13% -
Source: 14 Overlooked Small Cap Stocks With Solid Growth Potentials