Interested in the small-cap sector? Small-cap companies tend to have greater volatility and more company risk as the firm establishes itself and its product. However these names offer diversification for large-cap names.
We ran a screen on the small-cap sector (stocks with market caps below $1 billion) for high-growth names, with five-year projected EPS growth above 20%. We then screened these names for those with impressive profitability, beating their industry averages on gross, operating and pretax margins by at least 5% each.
Interactive Chart: Press Play to compare changes in market cap over the last two years for the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.
Do you think these names will live up to their high growth expectations? Use this list as a starting point for your own analysis.
List sorted by difference between gross margin and industry average, which indicates superior profitability.
1. CEVA Inc. (CEVA): Engages in designing and licensing silicon intellectual property (SIP) for handsets, portable multimedia and consumer electronics markets. Market cap at $513.15M. Price at $21.50. Five-year projected EPS growth at 29.14%. TTM gross margin at 94.93% vs. industry average at 59.54%. TTM operating margin at 30.81% vs. industry average at 23.28%. TTM pretax margin at 35.64% vs. industry average at 22.22%.
2. Teavana Holdings, Inc. Common S (TEA): Operates as a specialty retailer of loose-leaf teas, teawares and other tea-related merchandise. Market cap at $748.54M. Price at $19.35. Five-year projected EPS growth at 31.67%. TTM gross margin at 63.77% vs. industry average at 37.85%. TTM operating margin at 18.79% vs. industry average at 10.17%. TTM pretax margin at 17.8% vs. industry average at 9.37%.
3. OYO Geospace Corp. (OYOG): Engages in designing and manufacturing instruments and equipment used in the acquisition and processing of seismic data; and in the characterization and monitoring of producing oil and gas reservoirs. Market cap at $666.94M. Price at $105.50. Five-year projected EPS growth at 37.00%. TTM gross margin at 47.97% vs. industry average at 34.18%. TTM operating margin at 26.12% vs. industry average at 17.91%.TTM pretax margin at 26.34% vs. industry average at 13.4%.
*Profitability data sourced from Fidelity, all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.