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Small cap stocks are always interesting investments. They have room to grow, but they can also carry much more added risk. Today we focus on small cap stocks in the industrial metals and minerals sector, looking for companies whose fundamentals suggest that they are set to grow over the next year. We screened further for stocks that also look undervalued, again according to their fundamentals. We hope you like this short list we came up with.

The Price/Book Value Ratio is a great price-multiple valuation metric to find companies that could be potentially undervalued or overvalued. If a firm has a Price/Book Value Ratio of less than 1 it is stated to be trading below "break up" value. A lower P/BV Ratio can indicate a potentially mispriced company or indicate that something is fundamentally wrong with it.

The Price/Sales ratio is a price-multiple valuation metric used to help identify if a firm is cheap by its twelve month trailing sales numbers. In the most basic terms it let's an investor know how much the investment community is willing to pay for every dollars worth of sales. A firm with a P/S ratio of one or lower would be viewed as cheap because investors are paying $1 or less for every dollars worth of a firm's sales. On the other hand, a firm is generally considered to be expensive when the P/S ratio is above three. These are general guidelines used by the investment community not hard rules to be clear. Price/Sales Ratio = Current Stock Price/Revenue (sales) per Share

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 industrial metals & minerals stocks. We then looked for companies that are undervalued from a price-multiple valuation standpoint (P/BV<1)(P/S<1). We next screened for businesses with estimated high-growth, with 1-year projected EPS growth above 25%.

Do you think these small-cap stocks deserve to grow higher? Use our list along with your own analysis.

1) Thompson Creek Metals Company Inc. (NYSE:TC)

Sector:Basic Materials
Industry:Industrial Metals & Minerals
Market Cap:$541.09M
Beta:2.71

Thompson Creek Metals Company Inc. has a Price/Book Value Ratio of 0.31, a Price/Sales Ratio of 0.94, and a 1-Year Projected Earnings Per Share Growth Rate of 46.34%. The short interest was 11.10% as of 06/12/2012. Thompson Creek Metals Company Inc. engages in mining, milling, processing, and marketing of molybdenum products in the United States and Canada. Its principal properties include the Thompson Creek Mine, an open-pit molybdenum mine and concentrator located in Idaho; the Endako Mine, an open-pit molybdenum mine, concentrator, and roaster in British Columbia; and the Langeloth metallurgical facility in Pennsylvania. The company also holds interests in exploration properties comprising the Berg property, a copper, molybdenum, and silver exploration project located in British Columbia; the Davidson property, an underground molybdenum exploration project in British Columbia; the Howard's Pass property, a lead and zinc project situated in the Yukon territory-northwest territories border; and the Maze Lake property, a gold project located in the Kivalliq district of Nunavut.

2) Arch Coal Inc. (NYSE:ACI)

Sector:Basic Materials
Industry:Industrial Metals & Minerals
Market Cap:$1.25B
Beta:1.82

Arch Coal Inc. has a Price/Book Value Ratio of 0.35, a Price/Sales Ratio of 0.28, and a 1-Year Projected Earnings Per Share Growth Rate of 104.70%. The short interest was 18.70% as of 06/12/2012. Arch Coal, Inc. engages in the production and sale of steam and metallurgical coal from surface and underground mines located in the United States. As of December 31, 2011, it operated or contracted out the operation of 46 active mines, and owned or controlled approximately 5.33 billion tons of proven and probable recoverable reserves; and owned or controlled primarily through long-term leases approximately 32,135 acres of coal land in Ohio, 25,037 acres of coal land in Maryland, 33,238 acres of coal land in Virginia, 371,071 acres of coal land in West Virginia, 105,667 acres of coal land in Wyoming, 242,390 acres of coal land in Illinois, 62,822 acres of coal land in Utah, 234,401 acres of coal land in Kentucky, 19,267 acres of coal land in Montana, 21,802 acres of coal land in New Mexico, and 18,443 acres of coal land in Colorado.

3) Alpha Natural Resources, Inc. (NYSE:ANR)

Sector:Basic Materials
Industry:Industrial Metals & Minerals
Market Cap:$1.86B
Beta:1.81

Alpha Natural Resources, Inc. has a Price/Book Value Ratio of 0.25, a Price/Sales Ratio of 0.24, and a 1-Year Projected Earnings Per Share Growth Rate of 37.60%. The short interest was 7.94% as of 06/12/2012. Alpha Natural Resources, Inc., together with its subsidiaries, engages in producing, processing, and selling steam and metallurgical coal in the United States. The company has mining operations in Virginia, West Virginia, Pennsylvania, Kentucky, and Wyoming.

*Company profiles were sourced from Finviz.

Source: 3 Undervalued Small Cap Industrial Metals & Minerals Stocks Set For Growth