3 High Growth, Small Cap Stocks Keeping Debt At Bay

Includes: IMPV, MM, SPSC
by: ZetaKap

Small-cap stocks tend to carry greater risk, and so investors who are after growth opportunities want to see qualities that offer assurance that the company is well positioned. Today, we focused on small-cap stocks that have two traits that indicate these companies are poised for growth: EPS growth rates above 25% for the next year and minimal debt. Keeping down debt is especially important for companies that still have a long road ahead of them. When a small-cap company incurs too much debt, it tends to hinder growth. Take a look at the list of small cap stocks below to see if any grab your attention and lead you to take a deeper look.

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.

The Long Term Debt/Equity Ratio is a variation of the traditional debt-to-equity ratio; this value computes the proportion of a company's long-term debt compared to its available capital. By using this ratio, investors can identify the amount of leverage utilized by a specific company and compare it to others to help analyze the company's risk exposure. Generally, companies that finance a greater portion of their capital via debt are considered riskier than those with lower leverage ratios.

We first looked for small cap stocks. We next screened for businesses with estimated high-growth, with 1-year projected EPS growth above 25%. We next screened for businesses that operate with little to no long term debt (Long Term D/E Ratio<.1). We did not screen out any sectors.

Do you think these small-cap stocks should be priced higher? Use this list as a starting-off point for your own analysis.

1) Imperva Inc. (NYSE:IMPV)

Sector Technology
Industry Application Software
Market Cap $705.69M
Beta -

IMPV stock chart

Key Metrics

1-Year Projected Earnings Per Share Growth Rate 358.30%
Long Term Debt/Equity Ratio 0.00
Short Interest 12.59%

Imperva, Inc. engages in the development, marketing, sales, service, and support of data security solutions that provide visibility and control over high value business data across critical systems within the data center. It offers SecureSphere Data Security Suite, a solution designed to prioritize and mitigate risks to high-value business data, protect against hackers and malicious insiders, and address and streamline regulatory compliance.

The company's SecureSphere is an integrated, modular suite offering database security products designed to secure business data in structured repositories in the data center; file security products designed to secure files, including spreadsheets, presentation slides, word processing documents, and PDFs containing business data stored by customers in unstructured repositories, such as file servers, network attached storage, and storage area network devices; and Web application firewall product that protects Web applications from cyber attacks and adapts to evolving threats to prevent data breaches.

Its solutions secure business data across various systems in data centers, including traditional on-premise data centers, as well as private, public, and hybrid cloud computing environments. The company's security and optimization offerings include Web application firewall services, content delivery optimization, and distributed denial of service-attack prevention that deliver on-demand Web application security. Imperva, Inc. provides its products and services to a range of customers, including banks, retailers, insurers, technology and telecommunication companies, and hospitals, as well as national, state, and local government agencies worldwide. The company was formerly known as WebCohort Inc. and changed its name to Imperva, Inc. in February 2004. Imperva, Inc. was founded in 2002 and is headquartered in Redwood Shores, California.

2) SPS Commerce, Inc. (NASDAQ:SPSC)

Sector Services
Industry Business Services
Market Cap $431.64M
Beta -

SPSC stock chart

Key Metrics

1-Year Projected Earnings Per Share Growth Rate 400.00%
Long Term Debt/Equity Ratio 0.00
Short Interest 4.30%

SPS Commerce, Inc. provides on-demand supply chain management solutions worldwide. It offers integration, collaboration, connectivity, visibility, and data analytics over the Internet using a software-as-a-service model. SPS Commerce, Inc. provides its solutions through SPSCommerce.net, a hosted software suite that enables suppliers, retailers, distributors, and other customers to manage and fulfill orders.

The company's platform delivers various solutions to suppliers and retailers, including trading partner integration, trading partner enablement, trading partner intelligence, and various peripheral solutions. It also operates Retail Universe, a collaborative online Website that facilitates relationships and communications with members of the retail ecosystem. The company was formerly known as St. Paul Software, Inc. and changed its name to SPS Commerce, Inc. in May 2001. SPS Commerce, Inc. was incorporated in 1987 and is headquartered in Minneapolis, Minnesota.

3) Millennial Media Inc. (NYSE:MM)

Sector Services
Industry Marketing Services
Market Cap $867.01M
Beta -

MM stock chart

Key Metrics

1-Year Projected Earnings Per Share Growth Rate 340.00%
Long Term Debt/Equity Ratio 0.00
Short Interest 3.40%

Millennial Media, Inc. provides mobile advertising solutions worldwide. It operates MYDAS, a mobile advertising technology platform for developers and advertisers. The company provides tools and services to developers that allow their apps to display banner ads, interactive rich media ads, and video ads through its platform.

The company's solutions for developers include software development kits that allows app to receive rich media, banner displays, and video adds; mediation tools, which allow developers to allocate ad requests among various advertising campaign sources; and data and analytics that comprise comprehensive ad revenue generation reports for their apps across various mobile operating systems. It also enables advertisers to gain insights into the performance of their ad campaigns and to manage their campaigns. The company was founded in 2006 and is headquartered in Baltimore, Maryland.

*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 08/31/2012.

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

Business relationship disclosure: This article was prepared for ZetaKap Media by one of our full-time analysts. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.