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 industrial companies? Do you prefer companies with strong profits? Company liquidity is an important consideration in any stock analysis. Liquidity gives a company the ability to make big acquisitions if it sees investment opportunities, a cushion for future lulls in demand, and most importantly, it keeps a company's doors open. Are these the types of stocks that you're looking for? For ideas on how to start your search, we ran a screen you may find helpful.
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. EPS growth rates help investors identify stocks that are increasing or decreasing in profitability. This profitability metric is generally a key driver in the price of the stock as it directly correlates to the profitability of the company as a whole.
The Net Margin is a profitability metric that illustrates, by percentage, how much of every dollar earned gets turned into a bottom line profit. This is just one of many profitability metrics used by investors and analysts to better understand what the company is being left with at the end of the day. Generally, a firm that can expand its net profit margins over a period of time will see its stock price rise as well due to the trend of increasing profitability. Net Margin = Net Income/Total Revenue
The Current ratio is a liquidity ratio used to determine a company's financial health. The metric illustrates how easily a firm can pay back its short obligations all at once through current assets. A company that has a current ratio of one or less is generally a liquidity red flag. Now this doesn't mean the company will go bankrupt tomorrow, but it also doesn't bode well for the company, and may indicate that it could have an issue paying back upcoming obligations.
The Quick ratio measures a company's ability to use its cash or assets to extinguish its current liabilities immediately. Quick assets include assets that presumably can be converted to cash at close to their book values. A company with a Quick Ratio of less than 1 cannot currently pay back its current liabilities. The quick ratio is more conservative than the Current Ratio because it excludes inventory from current assets, since some companies have difficulty turning their inventory into cash. If short-term obligations need to be paid off immediately, sometimes the current ratio would overestimate a company's short-term financial strength. In general, the higher the ratio, the greater the company's liquidity (i.e., the better able to meet current obligations using liquid assets).
We first looked for small cap industrial stocks. From here, we then looked for companies that have strong profitability (1-year fiscal EPS Growth Rate>10%)(Net Margin [TTM]>10%). We next screened for businesses with a large amount of cash on hand (Current Ratio>2)(Quick Ratio>2).
Do you think these small-cap stocks will go up in price? Use our screened list as a starting point for your own analysis.
1) Littelfuse Inc. (NASDAQ:LFUS)
|Industry:||Industrial Electrical Equipment|
Littelfuse Inc. has a Earnings Per Share Growth Rate of 10.62% and Net Margin of 12.66% and Current Ratio of 2.53 and Quick Ratio of 2.06. The short interest was 3.10% as of 05/21/2012. Littelfuse, Inc. designs, manufactures, and sells circuit protection devices in the Americas, Europe, and the Asia-Pacific. The company's Electronics segment provides circuit protection components, including fuses and protectors, positive temperature coefficient resettable fuses, varistors, polymer electrostatic discharge suppressors, discrete transient voltage suppression diodes, TVS diode arrays and protection thyristors, gas discharge tubes, and power switching components, as well as fuseholders, blocks, and related accessories used in mobile phones, flat-screen TVs, computers, telecommunications equipment, modems, data transmission lines, and alarm systems. This segment sells its products under the PICO II, NANO2 SMF, PulseGuard, TECCOR, SIDACtor, Battrax, and SPA brand names.
2) Cascade Corp. (NYSE:CASC-OLD)
|Industry:||Farm & Construction Machinery|
Cascade Corp. has a Earnings Per Share Growth Rate of 189.60% and Net Margin of 11.77% and Current Ratio of 3.75 and Quick Ratio of 2.22. The short interest was 2.56% as of 05/21/2012. 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 who manufacture construction, mining, agricultural, and industrial vehicles.
3) Polypore International Inc. (NYSE:PPO)
|Industry:||Industrial Equipment & Components|
Polypore International Inc. has a Earnings Per Share Growth Rate of 60.72% and Net Margin of 13.09% and Current Ratio of 3.52 and Quick Ratio of 2.38. The short interest was 31.40% as of 05/21/2012. Polypore International, Inc., a technology filtration company, develops, manufactures, and markets specialized microporous membranes used in separation and filtration processes. It operates in two segments, Energy Storage and Separations Media. The Energy Storage segment offers membranes that provide the function of separating the cathode and anode in applications, including lithium-ion batteries that are used in portable electronic devices, energy storage systems, cordless power tools, and electric drive vehicles; and lead-acid batteries used in automobiles, other motor vehicles, forklifts, and uninterruptible power supply systems.
4) Global Power Equipment Group Inc. (NASDAQ:GLPW)
Global Power Equipment Group Inc. has a Earnings Per Share Growth Rate of 107.69% and Net Margin of 13.81% and Current Ratio of 3.96 and Quick Ratio of 3.85. The short interest was 3.63% as of 05/21/2012. Global Power Equipment Group Inc. and its subsidiaries designs, engineers, and manufactures gas turbine auxiliary equipment; and provides routine and specialty maintenance services to customers in the utility and industrial sectors. Its gas turbine auxiliary equipment include filter houses, inlet systems, exhaust systems, diverter dampers, selective catalytic emission reduction systems, packaged skids, and precision parts and specialty fabrications. These products are primarily used in the operation of gas turbine power plants, as well as for other industrial, energy, and power-related applications.
5) Ceradyne Inc. (CRDN)
|Industry:||Industrial Equipment & Components|
Ceradyne Inc. has a Earnings Per Share Growth Rate of 193.30% and Net Margin of 12.13% and Current Ratio of 3.50 and Quick Ratio of 2.61. The short interest was 5.05% as of 05/21/2012. Ceradyne, Inc. engages in the development, manufacture, and market of technical ceramic products, ceramic powders, and components in the United States and internationally. Its products include lightweight ceramic armor and combat helmets for soldiers and other military applications; ceramic industrial components for erosion and corrosion resistant applications; ceramic powders, including boron carbide, boron nitride, titanium diboride, calcium hexaboride, zirconium diboride, and fused silica, which are used in manufacturing armor and a range of industrial and consumer products; evaporation boats for metallization of materials for food packaging; and ceramic diesel engine components. The company also offers functional and frictional coatings primarily for automotive applications; translucent ceramic orthodontic brackets; ceramic crucibles for melting silicon in the photovoltaic solar cell manufacturing process; ceramic-impregnated dispenser cathodes for microwave tubes, lasers, and cathode ray tubes; specialty glass compositions for solar, electronic, industrial, and health care markets; ceramic missile radomes for the defense industry; and fused silica powders for precision investment casting.
6) Proto Labs, Inc. (NYSE:PRLB)
|Industry:||Machine Tools & Accessories|
Proto Labs, Inc. has a Earnings Per Share Growth Rate of 111.29% and Net Margin of 16.92% and Current Ratio of 7.50 and Quick Ratio of 7.21. The short interest was 4.61% as of 05/21/2012. Proto Labs, Inc. produces CNC machined and injection molded plastic parts. It offers products that are made of various engineering-grade resins, such as ABS, polycarbonate, nylon, acetal, polypropylene, acrylic, PBT, HDPE, LDPE, TPE, and TPU, as well as LCP, including glass or fiber filled grades. The company was founded in 1999 and is headquartered in Maple Plain, Minnesota.
*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.