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? Interested in stocks paying dividend income, but don't know where to start? Looking for ways to dig deeper into a company's profitability? Are you after stocks that analysts are calling "buy" or "strong buy"? If yes, here are a few ideas to start your search.
The Operating Profit Margin is a profitability ratio that measures the effectiveness of the company's operating efficiency. This metric allows investors to see how much profit is left after all variable costs are covered. If the company's margin is increasing over time this means that it's earning more per dollar of sales. Finding trends in the Operating Profit Margin helps investors identify companies that are improving profitability over time and managing the economic landscape better than competitors.
Return on Assets [ROA] illustrates how much a company is generating in earnings from its assets alone. This metric gives investors a picture of how profitable the company is relative to the assets in current possession. As well, it lets investors see how efficient and effective management is at generating earnings from the company's assets. While most management teams can probably make money by throwing money at an issue very few can make very large profits with little investment.
We first looked for small cap stocks with a very high yield (more than 5%). From here, we then looked for companies with strong profit margins (1-year operating margin>15%)(ROA [TTM]>10%). From here, we then looked for companies that analysts rate as "Buy" or "Strong Buy" (mean recommendation < 3). We did not screen out any sectors.
Do you think these small-cap stocks have strong operations? Use our screened list as a starting point for your own analysis.
Mesabi Trust (NYSE:MSB)
Mesabi Trust has a Dividend Yield of 9.37%; a Payout Ratio of 99.87%; an Operating Profit Margin of 97.30%; Return on Assets of 319.37%; and Analysts' Rating of 2.00. The short interest was 5.76% as of 05/11/2012. Mesabi Trust operates as grantor trust in the United States. It produces iron ore pellets. The company holds interests in various properties, including its interest as an assignor in the amended assignments of Peters Lease and Cloquet Lease, which together cover approximately 9,750 acres in St.
W. P. Carey & Co. LLC (NYSE:WPC)
|Industry:||Real Estate Development|
W. P. Carey & Co. LLC has a Dividend Yield of 5.04%; Payout Ratio of 62.45%; Operating Profit Margin of 34.15%; Return on Assets of 10.73%; and Analysts' Rating of 1.00. The short interest was 0.23% as of 05/11/2012. W. P. Carey & Co. LLC, together with its subsidiaries, provides long-term sale-leaseback and build-to-suit transactions for companies worldwide and manages a global investment portfolio. It invests primarily in commercial properties that are each triple-net leased to single corporate tenants, which requires each tenant to pay substantially all of the costs associated with operating and maintaining the property. The company also operates as an advisor to publicly owned, non-actively traded real estate investment trusts, which are sponsored by it under the Corporate Property Associates brand name, as well as invests in similar properties.
Legacy Reserves Lp (NASDAQ:LGCY)
|Industry:||Oil & Gas Drilling & Exploration|
Legacy Reserves Lp has a Dividend Yield of 7.94%; Payout Ratio of 70.99%; Operating Profit Margin of 28.41%; Return on Assets of 14.35%; and Analysts' Rating of 1.60. The short interest was 0.25% as of 05/11/2012. Legacy Reserves LP, an independent oil and natural gas limited partnership, engages in the acquisition and development of oil and natural gas properties primarily located in the Permian Basin, Mid-Continent, and Rocky Mountain regions of the United States. As of December 31, 2010, it owned interests in producing oil and natural gas properties in 370 fields in the Permian Basin, Texas Panhandle, Wyoming, Oklahoma, and several other states; operated 2,132 gross productive wells; and owned non-operated interests in 3,227 gross productive wells, as well as had proved reserves of approximately 52.8 million barrels of crude oil equivalent.
*Company profiles were sourced from Finviz. Financial data was sourced from Finviz and Yahoo Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.