When considering investments in small cap stocks, it is helpful to have information that provides the big picture view of the company. After all, stocks at this level tend to be more volatile than those at the mid and large cap levels. One way to minimize risk and to understand a company's trajectory is to focus on those with EPS growth rates of 25% or better for the next five years. We ran a screen to find small cap stocks of this nature. Additionally, industry analysts have given recent 'Buy' or 'Strong Buy' ratings to these stocks. Take a look at the summary below of small cap stocks to start your investigation.
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. The 5-Year Expected EPS Growth Rate is a long term annual growth estimate, where the growth projections are made by analysts, the company or other credible sources.
We first looked for small cap stocks. Then, we looked for companies that have high future earnings per share growth forecasts(5-year projected EPS Growth Rate>25%). From here, we looked for companies that analysts rate as "Buy" or "Strong Buy" (mean recommendation < 3). We did not screen out any sectors.
Do you think these small-cap stocks have what it takes to grow? Use our list along with your own analysis.
1) Akorn, Inc. (AKRX)
|Industry||Drugs - Generic|
|5-Year Projected Earnings Per Share Growth Rate||45.39%|
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.
2) ReachLocal, Inc. (RLOC)
|5-Year Projected Earnings Per Share Growth Rate||46.67%|
ReachLocal, Inc. provides a suite of online marketing and reporting solutions to small and medium-sized businesses (SMBs) primarily in the United States, Canada, Australia, the United Kingdom, India, the Netherlands, Germany, and Japan. The company's products include ReachSearch, a search engine marketing product; ReachDisplay, a display advertising and remarketing product; ReachCast, a solution that builds and optimizes Web presence for the purpose of driving online search discovery, powering reputation management, and managing social media marketing; and remarketing and retargeting products. It also provides a suite of digital marketing solutions comprising TotalTrack, TotalLiveChat, TotalVideoNow, and TotalBannerNow to address specific marketing needs, such as lead optimization, online analytics, and digital creative solutions.
3) Vocera Communications, Inc. (VCRA)
|5-Year Projected Earnings Per Share Growth Rate||51.00%|
Vocera Communications, Inc. provides mobile communication solutions to healthcare and non-healthcare markets. The company offers Voice Communication solution, which includes a wearable voice-controlled communication badge and a software platform that enables users to connect instantly with other hospital staff simply by saying the name, function, or group name of the desired recipient; Messaging solution, which delivers text messages, alerts, and other information directly to and from smartphones; and Care Transition solution, a hosted voice and text based software application that captures, manages, and monitors patient information when responsibility for the patient is transferred from one caregiver to another.
It also provides consulting with customers to enhance organizational alignment around patient experience strategy and priorities, analyzing a customer's priority service lines, and developing a process improvement plan to increase patient and caregiver satisfaction, as well as providing training modules on topics; professional services comprising clinical workflow design, wireless assessment, solution configuration, training, and project management; and technical support services.
4) Heartware International Inc. (HTWR)
|Industry||Medical Instruments & Supplies|
|5-Year Projected Earnings Per Share Growth Rate||64.50%|
HeartWare International, Inc., a medical device company, develops and manufactures miniaturized implantable heart pumps or ventricular assist devices (VAD) for the treatment of advanced heart failure in the United States and internationally. The company offers HeartWare Ventricular Assist System, which includes a VAD, or blood pump, patient accessories, and surgical tools designed to provide circulatory support for patients in the advanced stage of heart failure. It is also developing the MVAD, a miniaturized blood pump, intended for chronic heart failure patients.
5) Gafisa S.A. (GFA)
|5-Year Projected Earnings Per Share Growth Rate||43.60%|
Gafisa S.A. operates as a homebuilder in Brazil. It engages in the development of residential buildings, including luxury buildings comprising swimming pools, gyms, visitor parking, and other amenities for upper-income customers; buildings for middle-income customers; and entry-level housing for lower-income customers. The company's brands include Tenda, which serves the entry-level housing segments; Gafisa that offers various residential options to the mid to higher income segments; and Alphaville, which focuses on the identification, development, and sale of residential communities.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on August 22, 2012.