Small-cap stocks tend to offer investors greater growth opportunities than large-cap alternatives, although this comes with its fair share of added risk. Are you looking for small caps? Looking for undervalued stocks? In search of companies that can manage their short-term debt well? Do you prefer companies that can also manage their long-term debt? We ran a screen you might be interested in.
The PEG ratio (price/earnings to growth ratio) is a valuation metric for determining the relative trade-off between the price of a stock, the earnings generated per share [EPS], and the company's expected growth. In general, the P/E ratio is higher for a company with a higher growth rate. Thus using just the P/E ratio would make high-growth companies appear overvalued relative to others. It is assumed that by dividing the P/E ratio by the earnings growth rate, the resulting ratio is better for comparing companies with different growth rates. A lower ratio is 'better' (cheaper) and a higher ratio is 'worse' (expensive) - a PEG ratio of 1 means the company is fairly priced.
The forward P/E is a price multiple valuation metric, which is similar to the current P/E ratio, except that it uses the forecast earnings instead. While this number might not be as accurate because it uses "forecast" numbers, it does offer the benefit of illustrating analysts' expectations of a firm. If the market believes that earnings will grow moving forward, then the forward P/E should be lower than the current P/E. Financial Leverage, also known as the Equity Multiplier, illustrates how a firm is financing its assets. The lower the number the more a firm is financing its assets internally through stockholder equity. The higher this metric is the more the firm is relying on debt to finance its assets.
The Debt/Equity Ratio illustrates how aggressively a company is financing its growth via debt. The more debt financing that is used in a capital structure, the more volatile earnings can become due to the additional interest expense. Should a company's potentially enhanced earnings fail to exceed the cost associated with debt financing over time, this can lead the company toward substantial trouble.
The Long Term Debt/Equity Ratio illustrates how aggressively a company is financing its growth via debt. The more debt financing that is used in a capital structure, the more volatile earnings can become due to the additional interest expense. Should a company's potentially enhanced earnings fail to exceed the cost associated with debt financing over time, this can lead the company toward substantial trouble.
We first looked for small-cap stocks. Next, we then screened for businesses that are undervalued when company growth rate is taken into account (PEG Ratio < 1)(forward P/E<10). We then looked for companies that operate with little to no debt (D/E Ratio<.3). We then screened for businesses that have maintained a sound long term capital structure (Long Term D/E Ratio<.1). We did not screen out any sectors.
Do you think these small-cap stocks will break through to new highs? Use our list along with your own analysis.
C&J Energy Services, Inc. (CJES)
|Industry:||Oil & Gas Equipment & Services|
C&J Energy Services, Inc. has a Price/Earnings to Growth Ratio of 0.32; a Forward Price/Earnings Ratio of 4.85; a Debt/Equity Ratio of 0.00; and Long Term Debt/Equity Ratio of 0.00. The short interest was 97.99% as of 05/11/2012. C&J Energy Services, Inc., through its subsidiaries, provides hydraulic fracturing, coiled tubing, and pressure pumping services to oil and natural gas exploration and production companies. The company offers hydraulic fracturing services to enhance the production of oil and natural gas from formations with low permeability; coiled tubing services to perform various functions associated with well-servicing operations and to facilitate completion of horizontal wells; and pressure pumping services, which include well injection, cased-hole testing, workover pumping, mud displacement, wireline pumpdowns, and pumping-down coiled tubing. It also constructs and sells oilfield equipment comprising hydraulic fracturing pumps, coiled tubing units, pressure pumping units, and other equipment for third-party customers in the energy services industry; and provides equipment repair services, and oilfield parts and supplies.
Bridgepoint Education, Inc. (BPI)
|Industry:||Education & Training Services|
Bridgepoint Education, Inc. has a Price/Earnings to Growth Ratio of 0.56; Forward Price/Earnings Ratio of 7.22; Debt/Equity Ratio of 0.00; and Long Term Debt/Equity Ratio of 0.00. The short interest was 17.83% as of 05/11/2012. Bridgepoint Education, Inc. provides post-secondary education services. It offers associate's, bachelor's, master's, and doctoral programs in the disciplines of business, education, psychology, social sciences, and health sciences. The company offers its programs at campuses of its Ashford University located in Clinton, Iowa; and University of the Rockies located in Colorado Springs, Colorado, as well as through online.
Crocs, Inc. (CROX)
|Industry:||Textile - Apparel Footwear & Accessories|
Crocs, Inc. has a Price/Earnings to Growth Ratio of 0.51; Forward Price/Earnings Ratio of 9.75; Debt/Equity Ratio of 0.05; and Long Term Debt/Equity Ratio of 0.00. The short interest was 6.28% as of 05/11/2012. Crocs, Inc. and its subsidiaries engage in the design, development, manufacture, marketing, and distribution of footwear, apparel, and accessories for men, women, and children in the Americas, Europe, and Asia. The company primarily offers casual and athletic shoes, and shoe charms. It designs and sells a range of footwear and accessories that utilize its proprietary closed cell-resin, called Croslite.
Cascade Corp. (CASC)
|Industry:||Farm & Construction Machinery|
Cascade Corp. has a Price/Earnings to Growth Ratio of 0.76; Forward Price/Earnings Ratio of 8.16; Debt/Equity Ratio of 0.02; and Long Term Debt/Equity Ratio of 0.02. The short interest was 2.60% as of 05/11/2012. Cascade Corporation engages in the manufacture and distribution of materials handling load engagement devices and related replacement parts under the Cascade name primarily for the lift truck and construction industries worldwide. It offers lift truck related products that are designed to handle loads with pallets and for specialized application loads without pallets; and specialized products, which include devices specifically designed to handle appliances, carpet and paper rolls, baled materials, textiles, beverage containers, drums, canned goods, bricks, masonry blocks, lumber, and plywood, as well as boxed, packaged, and containerized products. The company also provides construction related products to enable loaders, backhoes, and rough terrain lift trucks to move materials, as well as for use on excavators and loaders for conventional and specialized ground engagement applications. Its customers include lift truck original equipment manufacturers (OEM), original equipment dealers, and distributors; and OEMs that manufacture construction, mining, agricultural, and industrial vehicles.
Coeur d'Alene Mines Corporation (CDE)
Coeur d'Alene Mines Corporation has a Price/Earnings to Growth Ratio of 0.37; Forward Price/Earnings Ratio of 6.71; Debt/Equity Ratio of 0.07; and Long Term Debt/Equity Ratio of 0.05. The short interest was 4.46% as of 05/11/2012. Coeur d'Alene Mines Corporation, together with its subsidiaries, engages in the ownership, operation, exploration, and development of silver and gold mining properties primarily located in the United States, Mexico, Bolivia, Argentina, and Australia. Its properties include the San Bartolome silver mine in Bolivia; the Palmarejo silver-gold mine in Mexico; the Kensington gold mine in Alaska; and the Rochester silver-gold mine in Nevada. The company owns and operates the Martha silver-gold mine in Argentina, as well as owns a non-operating interest in a silver-base metal mine in Australia.
Capella Education Co. (CPLA)
|Industry:||Education & Training Services|
Capella Education Co. has a Price/Earnings to Growth Ratio of 0.67; Forward Price/Earnings Ratio of 9.93; Debt/Equity Ratio of 0.00; and Long Term Debt/Equity Ratio of 0.00. The short interest was 10.53% as of 05/11/2012. Capella Education Company operates as an online post-secondary education services company in the United States and internationally. The company, trough its Capella University, offers various doctoral, master's, and bachelor's programs primarily for working adults in public service leadership, behavioral health and human services, business management and technology, and education markets; and online distance learning services for degree-entry programs and doctoral level programs in various disciplines, including business, management, psychology, law, and computing disciplines.
*Company profiles were sourced from Finviz. Financial data was sourced from Finviz and Google Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.