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Small-cap stocks sometimes offer the opportunity for big growth, but also big risk. For a closer look at small-cap stocks, we ran a screen.

We screened small-cap stocks, with market caps between $300-500 million, using DuPont analysis of return on equity (ROE).

DuPont analyzes return on equity (net income/equity) profitability by breaking ROE up into three components:

ROE

= (Net Profit/Equity)

= (Net profit/Sales)*(Sales/Assets)*(Assets/Equity)

= (Net Profit margin)*(Asset turnover)*(Leverage ratio)

It therefore focuses on companies with the following positive characteristics: Increasing ROE along with,

•Decreasing leverage, (i.e. decreasing Asset/Equity ratio)

•Improving asset use efficiency (i.e. increasing Sales/Assets ratio) and improving net profit margin (i.e. increasing Net Income/Sales ratio)

Companies with all of these characteristics are experiencing increasing profits due to operations and not to increased use of financial leverage.

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

Do you think these companies have solid profitability? Use this list as a starting point for your own analysis.

1. Assisted Living Concepts Inc. (NYSE:ALC): Operates senior living residences in the United States. Market cap at $397.15M. MRQ net profit margin at 12.42% vs. 9.26% y/y. MRQ sales/assets at 0.127 vs. 0.12 y/y. MRQ assets/equity at 1.508 vs. 1.677 y/y.

2. Apollo Commercial Real Estate Finance, Inc. (NYSE:ARI): Operates as a commercial real estate finance company in the United States. Market cap at $322.59M. MRQ net profit margin at 59.55% vs. 37.% y/y. MRQ sales/assets at 0.016 vs. 0.013 y/y. MRQ assets/equity at 2.645 vs. 2.881 y/y.

3. DTS Inc. (NASDAQ:DTSI): Provides entertainment technologies that are incorporated into various entertainment products worldwide. Market cap at $465.27M. MRQ net profit margin at 24.41% vs. 22.9% y/y. MRQ sales/assets at 0.182 vs. 0.156 y/y. MRQ assets/equity at 1.094 vs. 1.168 y/y.

4. US Ecology, Inc. (NASDAQ:ECOL): Provides waste treatment, disposal, recycling, and transportation services to commercial and government entities in the United States. Market cap at $361.27M. MRQ net profit margin at 16.12% vs. 11.47% y/y. MRQ sales/assets at 0.205 vs. 0.182 y/y. MRQ assets/equity at 2.023 vs. 2.295 y/y.

5. Envestnet, Inc. (NYSE:ENV): Provides technology-enabled, Web-based investment solutions and services to financial advisors. Market cap at $381.92M. MRQ net profit margin at 5.99% vs. 3.15% y/y. MRQ sales/assets at 0.222 vs. 0.195 y/y. MRQ assets/equity at 1.191 vs. 1.387 y/y.

6. Global Partners LP (NYSE:GLP): Engages in the wholesale and commercial distribution of refined petroleum products and natural gas, and provides ancillary services in the United States and internationally. Market cap at $379.82M. MRQ net profit margin at 0.24% vs. 0.22% y/y. MRQ sales/assets at 2.197 vs. 1.648 y/y. MRQ assets/equity at 5.927 vs. 6.041 y/y.

7. Hawkins Inc. (NASDAQ:HWKN): Distributes bulk and specialty chemicals in the United States. Market cap at $386.85M. MRQ net profit margin at 6.59% vs. 6.02% y/y. MRQ sales/assets at 0.439 vs. 0.411 y/y. MRQ assets/equity at 1.248 vs. 1.255 y/y.

8. Quaker Chemical Corporation (NYSE:KWR): Develops, produces, and markets formulated chemical specialty products for various heavy industrial and manufacturing applications. Market cap at $498.2M. MRQ net profit margin at 5.64% vs. 4.85% y/y. MRQ sales/assets at 0.343 vs. 0.316 y/y. MRQ assets/equity at 2.032 vs. 2.492 y/y.

9. The Marcus Corporation (NYSE:MCS): Operates theatres, and hotels and resorts. Market cap at $363.58M. MRQ net profit margin at 10.07% vs. 8.79% y/y. MRQ sales/assets at 0.181 vs. 0.164 y/y. MRQ assets/equity at 1.979 vs. 2.045 y/y.

10. Modine Manufacturing Company (NYSE:MOD): Engages in the development, manufacture, and marketing of thermal management products, components, and systems for use in on-highway and off-highway original equipment manufacturer vehicular applications, and to various building, industrial, refrigeration, and fuel cell markets. Market cap at $409.35M. MRQ net profit margin at 2.22% vs. 1.54% y/y. MRQ sales/assets at 0.44 vs. 0.425 y/y. MRQ assets/equity at 2.395 vs. 2.563 y/y.

11. Marten Transport Ltd. (NASDAQ:MRTN): Operates as a temperature-sensitive truckload carriers in the United States, Canada, and Mexico. Market cap at $490.59M. MRQ net profit margin at 4.84% vs. 3.81% y/y. MRQ sales/assets at 0.336 vs. 0.297 y/y. MRQ assets/equity at 1.479 vs. 1.566 y/y.

12. Neenah Paper, Inc. (NYSE:NP): Engages in the production and sale of fine papers and technical products worldwide. Market cap at $470.09M. MRQ net profit margin at 4.65% vs. 4.24% y/y. MRQ sales/assets at 0.293 vs. 0.264 y/y. MRQ assets/equity at 3.39 vs. 3.811 y/y.

13. Perficient Inc. (NASDAQ:PRFT): Provides information technology consulting services primarily in the United States, Canada, and Europe. Market cap at $381.81M. MRQ net profit margin at 3.86% vs. 2.34% y/y. MRQ sales/assets at 0.315 vs. 0.269 y/y. MRQ assets/equity at 1.126 vs. 1.172 y/y.

14. United States Lime & Minerals, Inc. (NASDAQ:USLM): Engages in the manufacture and sale of lime and limestone products in the United States. Market cap at $380.76M. MRQ net profit margin at 13.47% vs. 10.86% y/y. MRQ sales/assets at 0.165 vs. 0.155 y/y. MRQ assets/equity at 1.416 vs. 1.469 y/y.

15. Viasystems Group Inc. (NASDAQ:VIAS): Provides multi-layer printed circuit boards and electro-mechanical solutions worldwide. Market cap at $387.82M. MRQ net profit margin at 5.57% vs. 3.64% y/y. MRQ sales/assets at 0.321 vs. 0.312 y/y. MRQ assets/equity at 2.9 vs. 3.087 y/y.

*Accounting data sourced from Google Finance, all other data sourced from Finviz.

Source: 15 Small-Cap Stocks With Strong Sources Of Profitability