It is a good sign when analysts deem a stock a 'Strong Buy'. What is even better is when those companies are pulling in noticeable profits. These validations are particularly important when considering investing in small caps because this category tends to hold more risk than mid or large caps. Today, we focused on basic materials dividend stocks that met both criteria. The list below offers insight on companies that rose to the top.
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
We first looked for small-cap basic materials dividend stocks. We then screened for businesses that analysts rate as "Strong Buy" (mean recommendation <2). We then looked for businesses that have shown strong bottom line growth over the last year (1-year fiscal EPS growth rate >10%)(Net Margin [TTM] >10%).
Do you think these small-cap stocks will offer healthy returns? Use our screened list as a starting point for your own analysis.
1) Mid-Con Energy Partners, LP (MCEP)
|Industry:||Independent Oil & Gas|
Mid-Con Energy Partners, LP has a Dividend Yield of 8.48%, an Analysts' Rating of 1.40, an Earnings Per Share Growth Rate of 1624.43%, and a Net Margin of 42.42%. The short interest was 0.37% as of 07/31/2012. Mid-Con Energy Partners, LP engages in the acquisition, exploitation, development, and production of oil and natural gas properties in North America. Its principal areas of operation are located in southern Oklahoma, northeastern Oklahoma, and parts of Oklahoma and Colorado within the Hugoton basin in the Mid-Continent region of the United States. The company owns a 68% average working interest in 296 gross producing (195 net) wells; 141 gross injection (93 net) wells; and 33 gross (29 net) wells shut-in or waiting on completion.
2) FutureFuel Corp. (FF)
|Industry:||Chemicals - Major Diversified|
FutureFuel Corp. has a Dividend Yield of 4.11%, a Payout Ratio of 42.12%, an Analysts' Rating of 1.00, an Earnings Per Share Growth Rate of 35.91%, and a Net Margin of 11.43%. The short interest was 2.83% as of 07/31/2012. FutureFuel Corp. engages in the manufacture and sale of diversified chemicals and biobased products in the United States. The company operates in two segments, Chemicals and Biofuels. The Chemicals segment offers custom manufacturing products, including nonanoyloxybenzene-sulfonate, a bleach activator for detergent and consumer products manufacturers; a proprietary herbicide for life sciences companies; and chlorinated polyolefin adhesion promoters and antioxidant precursors for chemical companies, as well as a biocide intermediates for other diversified chemical companies.
3) Tesoro Logistics LP (TLLP)
|Industry:||Oil & Gas Pipelines|
Tesoro Logistics LP has a Dividend Yield of 4.49%, a Payout Ratio of 49.70%, an Analysts' Rating of 1.50, an Earnings Per Share Growth Rate of 181.06%, and a Net Margin of 44.53%. The short interest was 0.22% as of 07/31/2012. 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, terminalling, 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 and Yahoo Finance.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.