When a company has steady growth, especially at the small cap level, it usually draws in attention. But when this company has also produced strong profits, it sends an even stronger positive message. This typically signifies that a company is well positioned to utilize the profits to fuel growth. For our list today we ran a scan to find small cap stocks with these traits in the basic materials sector. They all have returned strong profits in the past year and have EPS growth rates of 25% or better for the coming year. We think you will enjoy learning more about these small cap stocks listed below.
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
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.
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 basic materials stocks. We then looked for businesses with strong profitability (Net Margin [TTM] >10%)(1-year fiscal EPS growth rate>10%). We next screened for businesses with projected high growth, measured by 1-year projected EPS growth above 25%.
Do you think these small-cap stocks have more value to price in? Use our screened list as a starting point for your own analysis.
1) EQT Midstream Partners, LP (EQM)
|Industry||Major Integrated Oil & Gas|
|Earnings Per Share Growth Rate||69.37%|
|1-Year Projected Earnings Per Share Growth Rate||42.00%|
EQT Midstream Partners, LP provides natural gas transmission, storage, and gathering services in Pennsylvania and West Virginia. It owns, operates, acquires, and develops midstream assets in the Appalachian Basin. The company operates an approximately 700 mile interstate pipeline system; and approximately 2,100 miles of low-pressure gathering lines. It serves natural gas producers, local distribution companies, marketers, and commercial and industrial users. The company is based in Pittsburgh, Pennsylvania. EQT Midstream Partners, LP is a subsidiary of EQT Corporation.
2) Flotek Industries Inc. (FTK)
|Earnings Per Share Growth Rate||128.82%|
|1-Year Projected Earnings Per Share Growth Rate||46.67%|
Flotek Industries, Inc., together with its subsidiaries, develops and supplies drilling and production related products and services to the energy and mining industries in the United States and internationally. The company operates in three segments: Chemicals, Drilling, and Artificial Lift. The Chemicals segment designs, develops, manufactures, packages, and markets specialty chemicals used by oilfield service companies in oil and natural gas well drilling, cementing, stimulation, and production activities. This segment also designs, operates, and manages automated bulk material handling and loading facilities for oilfield service companies that handle oilfield products, including sand and other materials for well-fracturing operations, dry cement and additives for oil and natural gas well cementing, and supply materials used in oilfield operations. The Drilling segment manufactures, sells, rents, and inspects specialized equipment for use in drilling, completion, production, and workover activities. Its rental tools include stabilizers, drill collars, reamers, wipers, jars, shock subs, wireless survey, and measurement while drilling tools, and mud-motors; and equipment comprises mining equipment, centralizers, and drill bits.
This segment's downhole drilling tools are used in the oilfield, mining, water-well, and industrial drilling activities. The Artificial Lift segment manufactures and markets artificial lift equipment, such as the Petrovalve line of rod pump components, electric submersible pumps, gas separators, valves, and services to support coal bed methane production activities. The company sells its products directly and through third party agents to integrated oil and natural gas companies, independent oil and natural gas companies, pressure pumping service companies, and state-owned national oil companies. Flotek Industries, Inc. is headquartered in Houston, Texas.
3) TransGlobe Energy Corp. (TGA)
|Industry||Independent Oil & Gas|
|Earnings Per Share Growth Rate||84.46%|
|1-Year Projected Earnings Per Share Growth Rate||33.33%|
TransGlobe Energy Corporation operates as an exploration and production company with oil interests in the Arab Republic of Egypt and the Republic of Yemen. It has interests in 9 international blocks comprising 5.5 million acres. The company was formerly known as Dusty Mac Mines, Ltd. and changed its name to TransGlobe Energy Corporation in April 1996 as a result of its business focus shift from mineral exploration and extraction to oil and gas business. TransGlobe Energy Corporation was founded in 1968 and is headquartered in Calgary, Canada.
4) Northern Oil and Gas, Inc. (NOG)
|Industry||Oil & Gas Drilling & Exploration|
|Earnings Per Share Growth Rate||379.31%|
|1-Year Projected Earnings Per Share Growth Rate||44.44%|
Northern Oil and Gas, Inc., an independent energy company, engages in the acquisition, exploration, development, and production of crude oil and natural gas properties primarily in the Bakken and Three Forks formations within the Williston Basin in North Dakota and Montana. As of December 31, 2011, the company owned working interests in 664 discoveries, consisting of 659 targeting the Bakken and Three Forks formations, and 5 exploratory wells targeting other formations; and developed approximately 52,219 net acres and had approximately 17,290 net acres in the process of drilling and completing. Northern Oil and Gas, Inc. is based in Wayzata, Minnesota.
5) Inergy Midstream LLC (NRGM)
|Industry||Oil & Gas Pipelines|
|Earnings Per Share Growth Rate||35.95%|
|1-Year Projected Earnings Per Share Growth Rate||62.30%|
Inergy Midstream, L.P. engages in acquiring, owning, developing, and operating midstream energy assets. The company primarily involves in the storage and transportation of natural gas and natural gas liquids in northeast region of the United States. It owns and operates 4 natural gas storage facilities located in New York and Pennsylvania with an aggregate working gas storage capacity of 41.0 billion cubic feet with high peak injection and withdrawal capabilities; natural gas pipelines located in New York and Pennsylvania with 30 million cubic feet per day of intrastate transportation capacity; and 1.5 million barrel natural gas liquids storage facility located near Bath, New York. NRGM GP, LLC serves as the general partner of the Inergy Midstream, L.P. The company was founded in 2005 and is based in Kansas City, Missouri. Inergy Midstream, L.P. is a subsidiary of Inergy, L.P.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 09/02/2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.