When a company has built up a substantial amount of cash reserves, especially at the small-cap level, it communicates a message of confidence. It takes fiscal oversight and discipline to cultivate those funds, and it also shows that a company may be preparing to make an acquisition. If you prefer smaller sized companies for their growth opportunities, then you may be interested in our screen today. We chose small-cap stocks with a high level of liquidity that also have projected EPS growth rates above 25% over the next five years. Use the data and graphs below to begin your own analysis to see if these companies have bigger things on the horizon.
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.
The Current ratio is a liquidity ratio used to determine a company's financial health. The metric illustrates how easily a firm can pay back its short obligations all at once through current assets. A company that has a current ratio of one or less is generally a liquidity red flag. Now this doesn't mean the company will go bankrupt tomorrow, but it also doesn't bode well for the company, and may indicate that it could have an issue paying back upcoming obligations.
The Quick ratio measures a company's ability to use its cash or assets to extinguish its current liabilities immediately. Quick assets include assets that presumably can be converted to cash at close to their book values. A company with a Quick Ratio of less than 1 cannot currently pay back its current liabilities. The quick ratio is more conservative than the Current Ratio because it excludes inventory from current assets, since some companies have difficulty turning their inventory into cash. If short-term obligations need to be paid off immediately, sometimes the current ratio would overestimate a company's short-term financial strength. In general, the higher the ratio, the greater the company's liquidity (i.e., the better able to meet current obligations using liquid assets).
We first looked for small-cap stocks. We next screened for businesses that have expected earnings per share growth of more than 25 percent for the next five years(5-year projected EPS Growth Rate>25%). Next, we then screened for businesses that have strong liquidity (Current Ratio>2) (Quick Ratio>2). We did not screen out any sectors.
Do you think these small-cap stocks are undervalued? Use our list to help with your own analysis.
1) Abiomed Inc. (ABMD)
|Industry||Medical Appliances & Equipment|
|5-Year Projected Earnings Per Share Growth Rate||35.20%|
ABIOMED, Inc. provides medical devices in circulatory support and continuum of care in heart recovery to acute heart failure patients. The company's products are designed to enable the heart to rest, heal, and recover by enhancing blood flow and/or performing the pumping function of the heart. Its products consist of Impella 2.5 catheter, a percutaneous micro heart pump with an integrated motor and sensors for use in interventional cardiology; and Impella 5.0 catheter and Impella LD, which are percutaneous micro heart pumps with integrated motors and sensors for use primarily in the heart surgery suite.
The company also manufactures and sells the AB5000 Circulatory Support System and the BVS 5000 Biventricular Support System for the temporary support of acute heart failure patients in profound shock, including patients suffering from cardiogenic shock after a heart attack, post-cardiotomy cardiogenic shock, or myocarditis. Its products are used in the cardiac catheterization lab by interventional cardiologists and/or in the heart surgery suite by heart surgeons for patients who are in need of hemodynamic support prophylactically or emergently before, during, or after angioplasty or heart surgery procedures. The company sells its products through direct sales and clinical support personnel in the United States, Canada, Germany, France, the United Kingdom, and internationally. ABIOMED, Inc. was founded in 1981 and is based in Danvers, Massachusetts.
2) 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. The company sells its products through direct sales force, resellers, and distributors in the United States, the United Kingdom, and Australia. Vocera Communications, Inc. was founded in 2000 and its headquarters is in San Jose, California.
3) 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. HeartWare International, Inc. markets its products directly to cardiac centers and hospitals, as well as through medical device distributors. The company is headquartered in Framingham, Massachusetts.
4) U.S. Silica Holdings, Inc. (SLCA)
|Industry||Industrial Metals & Minerals|
|5-Year Projected Earnings Per Share Growth Rate||58.70%|
U.S. Silica Holdings, Inc. produces and sells various commercial silica and industrial mineral products. The company offers whole grain commercial silica products to be used as fracturing sand in connection with oil and natural gas recovery; the manufacturers of architectural and solar glass; and foundry and building products industry. It also provides ground commercial silica products for use in plastics, rubber, polishes, cleansers, paints, ceramic frits and glazes, textile fiberglass, and precision castings; and fine ground silica for use in premium paints, specialty coatings, sealants, silicone rubber, and epoxies.
In addition, the company offers certain other industrial mineral products, such as aplite, a mineral used to produce container glass and insulation fiberglass, and is a source of alumina to form defects in glass; calcined kaolin clay, a mineral primarily used as a functional extender in paints, plastics, specialty coatings, and rubber; and magnesium silicate, as well as produce and sells an adsorbent made from a mixture of silica and magnesium for preparative and analytical chromatography applications. It serves oil and gas recovery, glass, building products, foundry products, chemicals, and fillers and extenders markets. As of December 31, 2011, it had approximately 316 million tons of estimated proven and probable recoverable mineral reserves. The company was formerly known as GGC USS Holdings, Inc. and changed its name to U.S. Silica Holdings, Inc. in July 2011. The company has its headquarters in Frederick, Maryland. U.S. Silica Holdings, Inc. is a subsidiary of GGC USS Holdings, LLC.
5) Cementos Pacasmayo SAA (CPAC)
|5-Year Projected Earnings Per Share Growth Rate||34.40%|
Cements Pacasmayo S.A.A. and its subsidiaries engage in the production and commercialization of cement, blocks, concrete, and lime in the North region of Peru. The company is based in Santiago de Surco, Peru. Cements Pacasmayo S.A.A. is a subsidiary of Inversiones Pacasmayo S.A.
6) Comtech Telecommunications Corp. (CMTL)
|5-Year Projected Earnings Per Share Growth Rate||35.00%|
Comtech Telecommunications Corp. designs, develops, produces and markets products, systems and services for communications solutions in the United States and internationally. The company's Telecommunications Transmission segment provides satellite earth station equipment and systems, such as satellite earth station modems, block up converters, power amplifiers, transceivers, access devices, voice gateways, IP encapsulators, and media routers. This segment also offers over-the-horizon microwave equipment and systems that transmit voice, video, and data, as well as markets data compression integrated circuits. Its equipment and systems are used in the backhaul of wireless and cellular traffic, broadcasting (including HDTV), IP-based communications traffic, long distance telephony, and secure defense applications. Comtech's RF Microwave Amplifiers segment offers satellite earth station traveling wave tube amplifiers and solid-state amplifiers.
Its amplifiers are used in broadcast and broadband satellite communications, defense applications, such as telecommunications systems and electronic warfare systems; and commercial applications comprising oncology treatment systems, as well as to amplify signals carrying voice, video, or data for air-to-satellite-to-ground communications. The company's Mobile Data Communications segment provides satellite-based mobile location tracking and messaging hardware, such as mobile satellite transceivers and third-party produced ruggedized computers; and related services, as well as involves in the design and production of microsatellites. This segment's solutions enable satellite-based communications when mobile, real-time, and secure transmission is required. The company serves satellite systems integrators, wireless and other communication service providers, broadcasters, and defense contractors, as well as U.S. and foreign governments. Comtech Telecommunications Corp. was founded in 1967 and its headquarters is in Melville, New York.
Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 09/18/2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.