5 High-Growth Small-Caps With Encouraging Inventory Trends

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Includes: BEBE, CPST, DDC, VOLC, WGO
by: Kapitall

Do you diversify across all market-cap sectors? For a closer look at some interesting small-cap names, we ran a screen.

We began by screening the small-cap sector for stocks with high growth, with 5-year projected EPS trends above 25%.

We then screened for strong sales trends by comparing growth in revenue to growth in inventory over the last year. We screened for stocks with positive sales trends, with faster growth in revenue than inventory over the last year. Since inventory represents the portion of goods not yet sold, faster growth in revenue than inventory is considered an encouraging sign.

To screen for strengthening liquidity, we also only focused on those companies with inventory decreasing as a percent of current assets.

For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.

Tool provided by Kapitall (kapitall.com).

Do you think these companies will meet their high-growth expectations? Use this list as a starting point for your own analysis.

List sorted by increase in revenue over the last year.

1. Harry Winston Diamond Corporation (HWD): Engages in mining and retailing diamonds in Canada and internationally. Market cap at $1.03B, most recent closing price at $12.13. 5-year projected EPS growth at 36.20%. Revenue grew by 33.72% during the most recent quarter ($192.46M vs. $143.93M y/y). Inventory grew by 4.53% during the same time period ($486.71M vs. $465.61M y/y). Inventory, as a percentage of current assets, decreased from 73.4% to 72.2% during the most recent quarter (comparing 3 months ending 2012-04-30 to 3 months ending 2011-04-30).

2. Capstone Turbine Corp. (CPST): Develops, manufactures, markets, and services turbine generator sets and related parts for use in stationary distributed power generation applications. Market cap at $317.39M, most recent closing price at $1.06. 5-year projected EPS growth at 30.00%. Revenue grew by 32.38% during the most recent quarter ($30.13M vs. $22.76M y/y). Inventory grew by -2.02% during the same time period ($18.88M vs. $19.27M y/y). Inventory, as a percentage of current assets, decreased from 25.89% to 20.89% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31).

3. Winnebago Industries Inc. (WGO): Manufactures motor homes, which are self-contained recreation vehicles used primarily in leisure travel and outdoor recreation activities. Market cap at $318.72M, most recent closing price at $10.90. 5-year projected EPS growth at 26.40%. Revenue grew by 14.86% during the most recent quarter ($155.71M vs. $135.57M y/y). Inventory grew by -8.84% during the same time period ($69.6M vs. $76.35M y/y). Inventory, as a percentage of current assets, decreased from 46.58% to 39.61% during the most recent quarter (comparing 13 weeks ending 2012-05-26 to 13 weeks ending 2011-05-28).

4. Volcano Corporation (VOLC): Designs, develops, manufactures, and commercializes a suite of intravascular ultrasound (IVUS) and functional measurement (NYSEARCA:FM) products used in the diagnosis and treatment of vascular and structural heart disease. Market cap at $1.51B, most recent closing price at $28.28. 5-year projected EPS growth at 26.00%. Revenue grew by 11.56% during the most recent quarter ($90.36M vs. $81M y/y). Inventory grew by -10.49% during the same time period ($39.26M vs. $43.86M y/y). Inventory, as a percentage of current assets, decreased from 13.79% to 12.17% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-03-31).

5. Bebe Stores, Inc. (BEBE): Engages in the design, development, and production of women's apparel and accessories. Market cap at $506.88M, most recent closing price at $6.01. 5-year projected EPS growth at 30.50%. Revenue grew by 10.54% during the most recent quarter ($121.03M vs. $109.49M y/y). Inventory grew by 0.53% during the same time period ($34.23M vs. $34.05M y/y). Inventory, as a percentage of current assets, decreased from 14.22% to 13.62% during the most recent quarter (comparing 3 months ending 2012-03-31 to 3 months ending 2011-04-02).

*Accounting data sourced from Google Finance, all other data sourced from Finviz.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.