Interested in following smaller companies? Looking for ways to dig deeper into a company's profitability? Do you prefer stocks that can bring in profits over the next year? If so, we ran a screen keeping this idea in mind.
Return on Equity [ROE] is one way to identify great potential names relative to profitability. This ratio illustrates the percentage return on shareholder equity. As well, this metric segments the company into operational efficiency, asset use efficiency, and financial leverage. Why does this matter? Simply put, it allows investors to get a real picture of how the company is generating these returns and helps identify parts of the company that may be underperforming.
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.
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. We then looked for businesses that have been able to maintain a sound level of profitability for shareholders (ROE [TTM]>30%)(ROA [TTM]>10%). Next, we then screened for businesses with estimated high-growth, with 1-year projected EPS growth above 25%. We did not screen out any sectors.
Do you think these small-cap stocks are worth more than their current valuations? Use our list along with your own analysis.
1) BroadSoft, Inc. (BSFT)
BroadSoft, Inc. has a Return on Equity of 30.70% and Return on Assets of 14.67% and 1-Year Projected Earnings Per Share Growth Rate of 30.95%. The short interest was 25.76% as of 05/24/2012. BroadSoft, Inc. provides software and services that enable mobile, fixed-line, and cable service providers to deliver unified communications and other voice and multimedia services over Internet protocol [IP] based networks. The company's communications platform consists of BroadWorks software, which enables its service provider customers to provide enterprises and consumers with a range of cloud-based or hosted IP multimedia communications, such as private branch exchanges, video calling, unified communications, collaboration, and converged mobile and fixed-line services; BroadCloud hosted or cloud service that enables its service provider customers to offer Web collaboration, video conferencing, instant messaging, presence, and short messaging to their end-users; and BroadTouch, a client application that enables carriers to offers unified communications services for smartphones, tablets, desktops, and laptops. It also provides a range of professional support services, including pre-sales support; installation, network integration, project management, and remote upgrade services, as well as consulting services; product life-cycle services; and training services.
2) Akorn, Inc. (AKRX)
|Industry:||Drugs - Generic|
Akorn, Inc. has a Return on Equity of 34.73% and Return on Assets of 20.58% and 1-Year Projected Earnings Per Share Growth Rate of 28.57%. The short interest was 13.61% as of 05/24/2012. Akorn, Inc. engages in the manufacture and marketing of diagnostic and therapeutic ophthalmic pharmaceuticals products, niche hospital drugs, and injectable pharmaceuticals in the United States and internationally. It offers products in various specialty areas, including ophthalmology, antidotes, anti-infectives, pain management, anesthesia, and vaccines. The company's Ophthalmic segment markets diagnostic products, including mydriatics and cycloplegics, anesthetics, topical stains, gonioscopic solutions, angiography dyes, and others primarily for use in the office setting.
3) TiVo Inc. (TIVO)
TiVo Inc. has a Return on Equity of 42.41% and Return on Assets of 20.32% and 1-Year Projected Earnings Per Share Growth Rate of 83.30%. The short interest was 9.80% as of 05/24/2012. TiVo Inc., together with its subsidiaries, provides technology and services for television solutions, including digital video recorders (DVRs) and connected televisions in the United States and internationally. The company offers subscription-based TiVo service, which enhances home entertainment by providing consumers with a way to record, watch, and control live television, as well as to receive videos, pictures, and movies from cable, broadcast, and broadband sources in one interface. It also provides a platform for advertising and audience research measurement services.
4) Epoch Investment Partners, Inc. (EPHC)
Epoch Investment Partners, Inc. has a Return on Equity of 38.01% and Return on Assets of 34.53% and 1-Year Projected Earnings Per Share Growth Rate of 30.10%. The short interest was 3.82% as of 05/24/2012. Epoch Investment Partners, Inc. is a publicly owned investment manager. The firm primarily provides its services to pooled investment vehicles, typically mutual funds. It also caters to high net worth individuals, investment companies, corporations, public funds, foundations, state or municipal government entities, endowments, pension and profit sharing plans, and charitable organizations.
5) Flotek Industries Inc. (FTK)
Flotek Industries Inc. has a Return on Equity of 49.63% and Return on Assets of 12.58% and 1-Year Projected Earnings Per Share Growth Rate of 52.50%. The short interest was 16.18% as of 05/24/2012. Flotek Industries, Inc., together with its subsidiaries, develops and supplies drilling and production related products and services to the energy and mining industries in the United States and internationally. The company operates in three segments: Chemicals, Drilling, and Artificial Lift. The Chemicals segment designs, develops, manufactures, packages, and markets specialty chemicals used by oilfield service companies in oil and natural gas well drilling, cementing, stimulation, and production activities.
6) Teavana Holdings, Inc. (TEA)
Teavana Holdings, Inc. has a Return on Equity of 38.05% and Return on Assets of 22.23% and 1-Year Projected Earnings Per Share Growth Rate of 33.33%. The short interest was 26.44% as of 05/24/2012. Teavana Holdings, Inc., together with its subsidiaries, operates as a specialty retailer of loose-leaf teas, tea wares, and other tea-related merchandise in the United States, Canada, and Mexico. The company offers approximately 100 varieties of loose-leaf teas; and a selection of fresh-brewed teas. It also provides tea wares and other tea-related merchandise, such as handcrafted cast-iron, clay, and ceramic tea pots; tea cups and mugs; tea accessories; tea dcor and media products; and tea foods.
7) Medidata Solutions, Inc. (MDSO)
|Industry:||Healthcare Information Services|
Medidata Solutions, Inc. has a Return on Equity of 46.85% and Return on Assets of 22.28% and 1-Year Projected Earnings Per Share Growth Rate of 27.68%. The short interest was 9.60% as of 05/24/2012. Medidata Solutions, Inc. provides software-as-a-service based clinical development solutions for life science organizations worldwide. Its solutions comprise software and services that allow customers to increase the value of their development programs by designing, planning, and managing key aspects of the clinical trial process, including study and protocol design, trial planning and budgeting, site negotiation, clinical portal, trial management, randomization and trial supply management, clinical data capture and management, safety events capture, medical coding, clinical business analytics, and data flow and interoperability. The company primarily offers Medidata Rave, a comprehensive platform for capturing and managing clinical data.
8) Spirit Airlines, Inc. (SAVE)
Spirit Airlines, Inc. has a Return on Equity of 46.70% and Return on Assets of 13.23% and 1-Year Projected Earnings Per Share Growth Rate of 26.18%. The short interest was 3.91% as of 05/24/2012. Spirit Airlines, Inc. provides passenger airline services. It provides travel opportunities principally to and from south Florida, the northeast United States, the Caribbean, and Latin America. The company also offers optional travel-related products or services.
9) Tesoro Logistics LP (TLLP)
|Industry:||Oil & Gas Pipelines|
Tesoro Logistics LP has a Return on Equity of 37.57% and Return on Assets of 29.45% and 1-Year Projected Earnings Per Share Growth Rate of 36.00%. The short interest was 0.11% as of 05/24/2012. Tesoro Logistics LP engages in the ownership, operation, development, and acquisition of crude oil and refined products logistics assets in the United States. The company is involved in the gathering, terminaling, transportation, and storage of crude oil and refined products. Its assets consist of a crude oil gathering system in the Bakken Shale/Williston Basin area of North Dakota and Montana; eight refined products terminals in the midwestern and western United States; a crude oil and refined products storage facility; and five related short-haul pipelines.
*Company profiles were sourced from Finviz. Financial data was sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.