7 Low-Debt Small Cap Stocks Slated For Growth

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 |  Includes: AFFY, CPST, DDC, KFRC, PCBC, SVN, TRNX
by: ZetaKap

Companies at the small cap level have more to prove than companies of larger stature. They have to send messages to potential investors that instill confidence about their capacity for growth. Today we looked for two indicators to find small cap sized companies that are well positioned for broadening their horizons: minimal debt and strong projected EPS growth rates. Too much debt can undermine growth plans. On the flip side, companies that have kept debt low demonstrate they have a handle on finances and other sources of funding like profits and reserves. If small cap stocks of this nature appeal to you then you will find the data and graphs below a helpful place to start your investigation.

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.

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. We then screened for businesses that have maintained a sound long term capital structure (long term D/E ratio<.1). From here, we then looked for companies with estimated high-growth, with 5-year projected EPS growth above 25%. We did not screen out any sectors.

Do you think these small-cap stocks deserve to grow higher? Use our screened list as a starting point for your own analysis.

1) Capstone Turbine Corp. (NASDAQ:CPST)

Sector Industrial Goods
Industry Industrial Electrical Equipment
Market Cap $308.56M
Beta 1.64
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CPST stock chart

Key Metrics

Long Term Debt/Equity Ratio 0.00
5-Year Projected Earnings Per Share Growth Rate 30.00%
Short Interest 16.49%
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Capstone Turbine Corporation develops, manufactures, markets, and services turbine generator sets and related parts for use in stationary distributed power generation applications. Its stationary distributed power generation applications include cogeneration combined heat and power, integrated, resource recovery, and secure power, as well as combined cooling, heat, and power; and its products are used as battery charging generators for hybrid electric vehicle applications. The company primarily offers microturbine units, subassemblies, and components.

It also provides various accessories, including rotary gas compressors with digital controls, heat recovery modules for CHP applications, dual mode controllers that allow automatic transition between grid connect and stand-alone modes, batteries with digital controls for stand-alone/dual-mode operations, power servers for multipacked installations, and protocol converters for Internet access, as well as frames, exhaust ducting, and installation hardware. Further, it remanufactures microturbine engines; and provides after-market parts and services, scheduled and unscheduled maintenance, and factory and on-site training services. The company's microturbines can be fueled by various sources, including natural gas, propane, sour gas, landfill or digester gas, kerosene, diesel, and biodiesel. It primarily sells its products directly to end users, as well as through distributors in North America, Asia, Australia, Europe, the Russian Federation, and South America. Capstone Turbine Corporation was founded in 1988 and is based in Chatsworth, California.

2) Kforce Inc. (NASDAQ:KFRC)

Sector Services
Industry Staffing & Outsourcing Services
Market Cap $465.14M
Beta 1.57
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KFRC stock chart

Key Metrics

Long Term Debt/Equity Ratio 0.06
5-Year Projected Earnings Per Share Growth Rate 30.00%
Short Interest 4.14%
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Kforce Inc., together with its subsidiaries, provides professional and technical staffing services and solutions in the United States. It operates in five segments: Technology, Finance and Accounting, Clinical Research, Health Information Management, and Government Solutions. The Technology segment offers temporary staffing and permanent placement services to its clients, focusing on information technology comprising systems/applications programmers and developers, senior-level project managers, systems analysts, enterprise data management, e-business, and networking technicians, as well as healthcare, financial services, and government integrators.

The Finance and Accounting segment provides temporary staffing and permanent placement services to its customers in taxation, budget preparation and analysis, mortgage and loan processing, financial reporting, cost analysis, accounts payable, accounts receivable, professional administrative, credit and collections, general accounting, audit services, and systems and controls analysis and documentation. The Clinical Research segment is involved in providing functional outsourcing solutions for monitoring clinical research site, contingent contract staffing, and permanent placement of clinical research personnel to pharmaceutical and biotechnology companies.

The Health Information Management segment offers temporary staffing and permanent placement services to its clients consisting of acute care facilities, physician clinics, software providers, and insurance companies, as well as in medical coding, the revenue life cycle, and health information technology areas. The Government Solutions segment provides technology, and finance and accounting professionals to the federal government; and integrated business solutions in the information technology, data and knowledge management, research and development, financial management, and accounting areas. Kforce Inc. was founded in 1994 and is headquartered in Tampa, Florida.

3) 7 Days Group Holdings Limited (NYSE:SVN)

Sector Services
Industry Lodging
Market Cap $476.81M
Beta -
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SVN stock chart

Key Metrics

Long Term Debt/Equity Ratio 0.07
5-Year Projected Earnings Per Share Growth Rate 30.57%
Short Interest 2.01%
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7 Days Group Holdings Limited, through its subsidiaries, operates a chain of limited service economy hotels under the brand name of 7 Days Inn in China. The company provides accommodations and services primarily to business and leisure travelers. As of December 31, 2010, it operated 568 hotels in operation, including 247 managed hotels, with 56,410 hotel rooms in 89 cities, as well as 197 hotels with 19,345 hotel rooms under conversion. The company was founded in 2004 and is based in Guangzhou, China.

4) Pacific Capital Bancorp (NASDAQ:PCBC)

Sector Financial
Industry Regional - Pacific Banks
Market Cap $1.51B
Beta 0.93
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PCBC stock chart

Key Metrics

Long Term Debt/Equity Ratio 0.09
5-Year Projected Earnings Per Share Growth Rate 46.50%
Short Interest 11.66%
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Pacific Capital Bancorp operates as the bank holding company for Santa Barbara Bank & Trust, National Association that provides various commercial and consumer banking services to households, professionals, and businesses. It offers depository services, such as checking accounts, interest-bearing checking accounts, money market demand accounts, individual retirement accounts, savings accounts, and certificates of deposit. The company also provides loan products, including commercial and industrial loans, commercial real estate loans, lines of credit, letters of credit, asset based lending, construction loans, and land acquisition and development loans to small business and middle market commercial clients; residential real estate loans, home equity lines and loans, and consumer loans to individual clients; and small business administration loans.

In addition, it offers safe deposit boxes, travelers' checks, money orders, foreign exchange services, and cashiers' checks; trust and investment advisory services; investment reviews, analysis, and customized portfolio management for separately managed accounts; full service brokerage; trust and fiduciary services; equity and fixed income management services; and real estate and specialty asset management services. As of December 31, 2011, the company operated 47 branches in the central coast of California. Further, it serves clients through loan production centers, automated teller machines, and customer contact call centers, as well as offers services through online banking. The company was founded in 1960 and is headquartered in Santa Barbara, California.

5) Tornier N.V. (NASDAQ:TRNX)

Sector Healthcare
Industry Medical Instruments & Supplies
Market Cap $786.85M
Beta -
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TRNX stock chart

Key Metrics

Long Term Debt/Equity Ratio 0.06
5-Year Projected Earnings Per Share Growth Rate 28.33%
Short Interest 2.48%
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Tornier N.V., a medical device company, designs, manufactures, and markets devices for joint replacement and soft tissue repair that enable surgical specialists to enhance patients' lives by restoring motion and physical vitality. It principally serves surgeons treat musculoskeletal injuries and disorders of the shoulder, elbow, hand, wrist, ankle, and foot. The company offers approximately 90 product lines, including joint replacement, trauma, sports medicine, and biologic products to treat the extremities. It also provides joint replacement products for the hip and knee in certain international markets. Tornier N.V. sells its products in approximately 35 countries worldwide. The company is headquartered in Amsterdam, the Netherlands.

6) Affymax, Inc. (OTCPK:AFFY)

Sector Healthcare
Industry Biotechnology
Market Cap $758.18M
Beta 1.26
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AFFY stock chart

Key Metrics

Long Term Debt/Equity Ratio 0.10
5-Year Projected Earnings Per Share Growth Rate 27.50%
Short Interest 15.76%
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Affymax, Inc., a biopharmaceutical company, engages in the development of drugs for the treatment of serious and life-threatening conditions in the United States. It offers OMONTYS (peginesatide) Injection for the treatment of anemia in chronic kidney disease in adult patients on dialysis. OMONTYS is a synthetic, peptide-based erythropoiesis stimulating agent designed to stimulate production of red blood cells. The company has strategic alliance agreement with Takeda Pharmaceutical Company Limited to develop and commercialize OMONTYS. Affymax, Inc. was founded in 2001 and is headquartered in Palo Alto, California.

7) Harry Winston Diamond Corporation (HWD)

Sector Basic Materials
Industry Nonmetallic Mineral Mining
Market Cap $1.13B
Beta 2.21
Click to enlarge

HWD stock chart

Key Metrics

Long Term Debt/Equity Ratio 0.09
5-Year Projected Earnings Per Share Growth Rate 36.20%
Short Interest 0.75%
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Harry Winston Diamond Corporation, a diamond company, engages in mining and retailing diamonds in North America, Europe, and Asia. The company supplies rough diamonds through holding a 40% interest in the Diavik Diamond Mine located at Lac de Gras in Canada's Northwest Territories; and retails fine jewelry and watches under the Harry Winston brand. As of January 31, 2012, it operated 20 directly operated salons, 4 licensed salons, and 194 wholesale watch doors. The company was formerly known as Aber Diamond Corporation and changed its name to Harry Winston Diamond Corporation in 2007. Harry Winston Diamond Corporation was founded in 1980 and is based in Toronto, Canada.

*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 09/15/2012.

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.