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Experienced investors tend to keep an eye on companies at all phases of growth, even the higher risk small-cap level. Not only does it keep it interesting to learn about up and coming businesses, but small caps can offer great growth potential. Especially when you focus on the elements that point to companies with solid fundamentals in place like strong profits and relatively little debt. Obviously, a small-cap sized company that is saddled with debt and weak or even mediocre profit generation sends a red flag to many investors as these companies appear to be floundering. With this in mind, we have a list of profitable small-cap companies that have not put themselves in compromising positions with debt. Take a look at the small-cap stocks below to see if any capture your interest.

The Operating Profit Margin is a profitability ratio that measures the effectiveness of the company's operating efficiency. This metric allows investors to see how much profit is left after all variable costs are covered. If the company's margin is increasing over time this means that it's earning more per dollar of sales. Finding trends in the Operating Profit Margin helps investors identify companies that are improving profitability over time and managing the economic landscape better than competitors.

Return on Assets [ROA] illustrates how much a company is generating in earnings from its assets alone. This metric gives investors a picture of how profitable the company is relative to the assets in current possession. As well, it lets investors see how efficient and effective management is at generating earnings from the company's assets. While most management teams can probably make money by throwing money at an issue very few can make very large profits with little investment.

The Debt/Equity Ratio illustrates how aggressively a company is financing its growth via debt. The more debt financing that is used in a capital structure, the more volatile earnings can become due to the additional interest expense. Should a company's potentially enhanced earnings fail to exceed the cost associated with debt financing over time, this can lead the company toward substantial trouble.

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. Next, we then screened for businesses with strong profit margins (1-year operating margin>15%) (ROA [TTM]>10%). We next screened for businesses that have maintained a sound capital structure (D/E Ratio<.1). We then looked for companies 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 will offer healthy returns? Use our list to help with your own analysis.

1) Mesabi Trust (NYSE:MSB)

SectorFinancial
IndustryDiversified Investments
Market Cap$352.93M
Beta1.77

MSB stock chart

Key Metrics

Operating Profit Margin97.12%
Return on Assets235.38%
Debt/Equity Ratio0.00
Long Term Debt/Equity Ratio0.00
Short Interest4.31%

Mesabi Trust operates as a royalty trust in the United States. The company produces iron ore pellets. It holds interests the Peter Mitchell mine located at the eastern end of the Mesabi Iron Range, near Babbitt, Minnesota. The company holds various agreements with the Northshore Mining Company that mines iron ore, which is in the form of taconite, crushes it, separates the iron particles from the non-metallic, and forms the resulting concentrate into pellets that are shipped for use in steel-producing blast furnaces of customers of CCI, a mining company in North America. Mesabi Trust was founded in 1919 and is based in New York, New York.

2) Silvercorp Metals Inc. (NYSE:SVM)

SectorBasic Materials
IndustrySilver
Market Cap$1.04B
Beta1.60

SVM stock chart

Key Metrics

Operating Profit Margin59.56%
Return on Assets18.71%
Debt/Equity Ratio0.00
Long Term Debt/Equity Ratio0.00
Short Interest5.20%

Silvercorp Metals Inc., together with its subsidiaries, engages in the acquisition, exploration, development and mining of precious and base metal properties in China and Canada. It operates four silver-lead-zinc mines comprising the Ying, TLP, HPG, and LM mines located in the Ying Mining District in the Henan Province of China. The company also holds interests in the XBG silver-gold-lead-zinc mine with a mining permit covering 26.36 square kilometers (km2); and the XHP silver-gold-lead-zinc mine comprising a 14 km2 mining permit located in the Ying Mining District in Henan Province of China. In addition, it engages in operating the BYP gold-lead-zinc project in Hunan Province, and mining at the GC silver-lead-zinc project in Guangdong Province in China. The company was formerly known as SKN Resources Ltd. and changed its name to Silvercorp Metals Inc. in May 2005. Silvercorp Metals Inc. has its headquarters in Vancouver, Canada.

3) Crexus Investment Corp. (NYSE:CXS)

SectorFinancial
IndustryREIT - Diversified
Market Cap$814.58M
Beta-

CXS stock chart

Key Metrics

Operating Profit Margin86.06%
Return on Assets11.25%
Debt/Equity Ratio0.02
Long Term Debt/Equity Ratio0.00
Short Interest3.97%

CreXus Investment Corp., through its subsidiaries, operates as a commercial real estate company. It acquires, manages, and finances commercial mortgage loans and commercial real estate debts, commercial real properties, commercial mortgage-backed securities, other commercial real estate-related assets, and agency residential mortgage-backed securities. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was founded in 2008 and is based in New York, New York.

4) Giant Interactive Group, Inc. (NYSE:GA)

SectorServices
IndustryBusiness Services
Market Cap$1.22B
Beta1.00

GA stock chart

Key Metrics

Operating Profit Margin61.25%
Return on Assets22.76%
Debt/Equity Ratio0.00
Long Term Debt/Equity Ratio0.00
Short Interest3.27%

Giant Interactive Group Inc. develops and operates online games in the People's Republic of China. It primarily offers multiplayer online role playing games (MMORPGs). The company operates 11 games, including 9 MMORPGs, 1 casual massively multiplayer online game, and 1 strategy browser game. Its games include ZT Online, ZT Online PTP, ZT Online Green Edition, ZT Online 2, ZT Online Classic Edition, King of Kings III, My Sweetie, Giant Online, Dragon Soul, XT Online, and The Golden Land. The company also licenses its games to online game operators in various countries, and to other Chinese companies for operation on their platforms. It markets and sells its prepaid game cards and game points through distributors and retail outlets, including Internet cafes, software stores, supermarkets, bookstores, newspaper stands, and convenience stores in China, as well as through official game Website. The company was formerly known as Giant Network Technology Limited and changed its name to Giant Interactive Group Inc. in July 1947. Giant Interactive Group Inc. was founded in 2004 and is based in Shanghai, the People's Republic of China.

5) Cray Inc. (NASDAQ:CRAY)

SectorTechnology
IndustryDiversified Computer Systems
Market Cap$454.98M
Beta1.60

CRAY stock chart

Key Metrics

Operating Profit Margin50.75%
Return on Assets45.21%
Debt/Equity Ratio0.00
Long Term Debt/Equity Ratio0.00
Short Interest3.60%

Cray Inc., together with its subsidiaries, designs, develops, manufactures, markets, and services high-performance computing (HPC) systems, known as supercomputers. Its products include Cray XE6 system, a massively parallel processing system; Cray XE6m supercomputer that incorporates its Cray Gemini network; and Cray XK6 System, a hybrid supercomputer. The company's products also include Future Big Data Analytics solution, a massively multithreaded platform with a shared memory architecture that is suitable for tasks, such as pattern matching, complex searches, scenario development, behavioral prediction, anomaly identification and graph analysis; and Cray Sonexion 1300, a storage and data management solution.

In addition, the company offers engineering services related to HPC systems and solutions and customer support services. It serves government agencies, academic institutions, and commercial entities in the United States, Canada, Europe, Japan, and the Asia-Pacific. The company was formerly known as Tera Computer Company and changed its name to Cray Inc. in 2000. Cray Inc. was founded in 1987 and its headquarters is in Seattle, Washington.

*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 09/13/2012.

Source: 5 High-Profit Small-Cap Stocks With Low Debt