There was a good article in the New York Times Tuesday on how cash is flowing back into the small cap space early in 2012 after abandoning the area in 2011. Given the cash coming into the space and the increasing M&A activity overall, the small cap sector should continue to outperform as long as the "risk on" trade is in force. Here are four $4 stocks that could provide outsized returns over the next 12 months.
Denny's (DENN) - Denny's Corporation, through its subsidiaries, engages in the ownership and operation of a chain of family-style restaurants. The company operates traditional American-style food restaurants under the Denny's brand name. As of November 01, 2011, it operated approximately 1,670 franchised, licensed, and company-owned restaurants in the United States, Canada, Costa Rica, Mexico, Honduras, Guam, Puerto Rico, and New Zealand". (Business Description from Yahoo Finance)
4 reasons Denny's is worth a gamble at just over $4 a share:
- Insiders are showing confidence by gobbling up over 200,000 shares in the last six months.
- The stock has a low five year projected PEG (.76) and is priced at just 79% of annual revenues.
- Denny's is showing solid growth in earnings. The company made 22 cents a share in FY2010, should earn 31 cents a share in FY2011 and analysts expect 39 cents a share for FY2012.
- The stock has impressive technical strength and sits solidly above its 200 day moving average (See Chart)
Abraxas Petroleum (AXAS) - "Abraxas Petroleum Corporation, an independent energy company, engages in the acquisition, development, exploration, and production of oil and gas in the United States and Canada. Its oil and gas assets are primarily located in the Rocky Mountain, Mid-Continent, Permian Basin, and Gulf Coast regions of the United States, as well as in the province of Alberta, Canada". (Business Description from Yahoo Finance)
4 reasons AXAS is a bargain under $4 a share:
- Abraxas has an impressive growth trajectory. The company lost 5 cents a share in FY2010, should earn 11 cents a share in FY2011 and analysts project 29 cents a share for FY2012.
- The company has already achieved being cash flow positive and sells for approximately 11 times operating cash flow.
- The median analysts' price target for the 8 analysts that follow AXAS is $5.50 a share.
- The stock is showing increasing technical strength and just crossed its 200 day moving average (See Chart)
CIBER, Inc. (CBR) - "CIBER, Inc. operates as an IT consulting, services, and outsourcing company worldwide. It provides application portfolio management support, such as analysis, design, development, testing, implementation, outsourcing, and maintenance of business applications for J2EE and .NET service-oriented architectures, as well as traditional client/server and mainframe development. The company also offers portal development, wireless and mobility applications, and content delivery services in IT strategy, architecture, business intelligence/data warehousing, collaborative solutions, and supply chain". (Business Description from Yahoo Finance)
4 reasons CBR is worth a flyer at $4 a share:
- The stock is some 50% below consensus price targets. The median analysts' price target on Ciber for the five analysts that cover the stock is $6.
- There has been net insider buying in the stock over the last six months.
- The stock sells for 80% of book value and under 30% annual revenues.
- The stock has bottomed and is on the verge of crossing its 200 day moving average (See Chart)
Fortress Investment Group (FIG) - "Fortress Investment Group LLC is a publicly owned investment manager. The firm provides its services to pooled investment vehicles, pension and profit sharing plans, corporations, institutional managed accounts and structured products, banking or thrift institutions, investment companies, charitable organizations, and state or municipal government entities". (Business Description from Yahoo Finance)
4 reasons FIG is a buy at $4 a share:
- The stock is selling for just over 7 times forward earnings and has a low five year projected PEG (.63)
- FIG is expected to bounce back next year with double digit revenue growth in FY2012 and insiders are holding tight (No insider selling in last six months)
- It has a solid balance sheet with approximately $50mm of net cash and sells for under 4 times operating cash flow.
- The stock looks like it is breaking out of its recent bottoming process and just crossed its 200 day moving average (See Chart)