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? Do you feel better knowing your favorite companies have enough cash to cover their operating expenses for a very long time? Do you prefer stocks with high projected earnings over the next year? For a closer look at stocks of this nature, we ran a screen.
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).
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. The 1-Year Expected EPS Growth Rate is an annual growth estimate, where the growth projections are made by analysts, the company or other credible sources.
We first looked for small cap stocks. Next, we then screened for businesses that have strong liquidity (Current Ratio>2)(Quick Ratio>2). We then looked for businesses that have expected earnings per share growth of more than 25 percent for next year(1-year projected EPS Growth Rate>25%). We did not screen out any sectors.
Do you think these small-cap stocks have what it takes to grow? Please use our list to assist with your own analysis.
1) Abiomed Inc. (ABMD)
|Industry:||Medical Appliances & Equipment|
Abiomed Inc. has a Current Ratio of 4.93 and Quick Ratio of 4.43 and 1-Year Projected Earnings Per Share Growth Rate of 91.30%. The short interest was 17.48% as of 05/22/2012. Abiomed, Inc. provides medical devices in circulatory support and continuum of care in heart recovery to acute heart failure patients. The company's products are designed to enable the heart to rest, heal, and recover by enhancing blood flow and/or performing the pumping function of the heart. Its products consist of Impella 2.
2) Advanced Energy Industries, Inc. (AEIS)
Advanced Energy Industries, Inc. has a Current Ratio of 4.73 and Quick Ratio of 3.67 and 1-Year Projected Earnings Per Share Growth Rate of 63.01%. The short interest was 5.39% as of 05/22/2012. Advanced Energy Industries, Inc., together with its subsidiaries, designs, manufactures, sells, and supports power conversion products that transform power into various usable forms.
The company offers thin-film deposition power conversion systems, including direct current (DC), pulsed DC mid frequency, and radio frequency (RF) power supplies, as well as matching networks and RF instrumentation; and thermal instrumentation products that provide temperature measurement solutions for applications in which time-temperature cycles affect material properties, productivity, and yield.
The company also offers solar power inverters, which provide a transformer-based or transformerless grid-tie photovoltaic (PV) solution to convert renewable solar power into electrical power, as well as integrated monitoring and performance measurement of PV installations.
3) Acorda Therapeutics, Inc. (ACOR)
Acorda Therapeutics, Inc. has a Current Ratio of 4.24 and Quick Ratio of 3.89 and 1-Year Projected Earnings Per Share Growth Rate of 92.31%. The short interest was 5.66% as of 05/22/2012. Acorda Therapeutics, Inc., a commercial-stage biopharmaceutical company, engages in the identification, development, and commercialization of novel therapies for multiple sclerosis (MS), spinal cord injury (SCI), and other central nervous system disorders primarily in the United States.
The company's marketed products include Ampyra (dalfampridine), a potassium channel blocker for improving walking in patients with MS; and Zanaflex Capsules and Zanaflex tablets (tizanidine hydrochloride), a short-acting drug for the management of spasticity. The company also markets products for the improvement of walking in adult patients with MS with walking disability under the Fampyra name internationally.
4) ADTRAN Inc. (ADTN)
ADTRAN Inc. has a Current Ratio of 5.50 and Quick Ratio of 4.16 and 1-Year Projected Earnings Per Share Growth Rate of 41.51%. The short interest was 9.52% as of 05/22/2012. ADTRAN, Inc. designs, manufactures, markets, and services communications network solutions that enable voice, data, video, and Internet communications across wireline and wireless networks worldwide.
The company's Carrier Networks division provides fiber and copper-based solutions for service providers to deliver voice, data, and video services to customers' premises and mobile network cell sites. Its products enable services, such as voice, VoIP, IP television, RF video, high speed Internet access, and data services based upon Ethernet, frame relay, TDM, and ATM networks, connecting the network with user components, such as switches, routers, gateways, integrated access devices (IADs), private branch exchanges (PBXs), and telephone key systems.
5) Abaxis Inc. (ABAX)
Abaxis Inc. has a Current Ratio of 7.31 and Quick Ratio of 6.18 and 1-Year Projected Earnings Per Share Growth Rate of 30.59%. The short interest was 7.14% as of 05/22/2012. Abaxis, Inc. develops, manufactures, markets, and sells portable blood analysis systems for use in veterinary or human patient-care setting to provide blood constituent measurements for clinicians worldwide.
The company offers point-of-care blood chemistry analyzer, which consists of a compact portable analyzer and a series of single-use plastic discs, called reagent discs, containing all the chemicals required to perform a panel of up to 14 tests on human patients and 13 tests on veterinary patients. It markets the blood analysis system under the Piccolo Xpress and Piccolo Classic names in the medical market; and under the VetScan VS2 and VetScan Classic names in the veterinary market.
6) Affymetrix Inc. (AFFX)
|Industry:||Scientific & Technical Instruments|
Affymetrix Inc. has a Current Ratio of 4.52 and Quick Ratio of 3.67 and 1-Year Projected Earnings Per Share Growth Rate of 52.20%. The short interest was 6.67% as of 05/22/2012. Affymetrix, Inc. engages in the development, manufacture, sale, and servicing of consumables and systems for genetic analysis in the life sciences and clinical healthcare markets primarily in the United States, Europe, Japan.
The company provides integrated GeneChip microarray platform, which includes disposable DNA probe arrays (chips) consisting of nucleic acid sequences, certain reagents for use with the probe arrays, a scanner and other instruments used to process the probe arrays, and software to analyze and manage genomic or genetic information obtained from the probe arrays.
The company also offers GeneTitan, an instrument system that runs genotyping and gene expression array plates; and GeneAtlas, an instrument for low-to-medium throughput that provides hybridization and array processing with microwell-based labware, as well as a line of multiplex assays to serve the discovery and the validation markets.
*Company profiles were sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.