Value investors know the satisfaction that derives from getting in on a stock at the right price and watching it move upward. Of course, timing it right is key with investments of this nature. With this in mind, we ran a screen to find small cap stocks that appear to be trading at a discount based when compared to their growth projections. All of these stocks have projected EPS growth rates above 25% for the coming year. Use the summaries below to help you begin your own analysis of these small cap stocks to see if they meet your standards.
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 Price/Book Value Ratio is a great price-multiple valuation metric to find companies that could be potentially undervalued or overvalued. If a firm has a Price/Book Value Ratio of less than 1 it is stated to be trading below "break up" value. A lower P/BV Ratio can indicate a potentially mispriced company or indicate that something is fundamentally wrong with it.
The Price/Cash Flow ratio is a price-multiple valuation metric that also measures a firm's future financial health. An advantage of using cash flow is that it removes non-cash factors, which helps provide a clearer picture of how much money the firm is taking in from a valuation standpoint. Price/Cash Flow Ratio = Current Stock Price/Cash Flow Per Share.
We first looked for small cap stocks. We then screened for businesses that have expected earnings per share growth of more than 25 percent for next year(1-year projected EPS Growth Rate>25%). We then looked for businesses that are undervalued from a price-multiple valuation standpoint (P/BV<1)(P/CFO<10). We did not screen out any sectors.
Do you think these small-cap stocks will go up in price? Please use our list to assist with your own analysis.
1) Gibraltar Industries, Inc. (ROCK)
|Industry||Steel & Iron|
|1-Year Projected Earnings Per Share Growth Rate||42.42%|
|Price/Book Value Ratio||0.83|
|Price/Cash Flow Ratio||8.93|
Gibraltar Industries, Inc. manufactures and distributes building products for the home improvement, highway construction, building materials, architectural industries, and construction industries. The company's products include a line of bar grating and safety plank grating for use in walkways, platforms, safety barriers, drainage covers, and ventilation grates; expanded and perforated metal used in walkways, catwalks, shelving, fencing, barriers, patio furniture, and other applications; metal lath products for use in exterior stucco, stone, and tile projects; fiberglass grating; and expansion joint systems, bearing assemblies, and pavement sealing systems used in bridge and highway infrastructure construction. It operates primarily in the United States, Canada, Mexico, and Europe. The company was founded in 1993 and is headquartered in Buffalo, New York.
2) First Midwest Bancorp Inc. (FMBI)
|Industry||Regional - Midwest Banks|
|1-Year Projected Earnings Per Share Growth Rate||97.78%|
|Price/Book Value Ratio||0.99|
|Price/Cash Flow Ratio||8.71|
First Midwest Bancorp, Inc. operates as the holding company for First Midwest Bank, which provides various commercial and retail banking services to individual, business, institutional, and governmental customers. It primarily engages in generating deposits and originating loans. As of April 16, 2012, it operated 100 banking offices located in communities in metropolitan Chicago, northwest Indiana, central and western Illinois, and eastern Iowa. The company was founded in 1982 and is headquartered in Itasca, Illinois.
3) Privatebancorp Inc. (PVTB)
|Industry||Regional - Midwest Banks|
|1-Year Projected Earnings Per Share Growth Rate||40.00%|
|Price/Book Value Ratio||0.91|
|Price/Cash Flow Ratio||8.55|
PrivateBancorp, Inc. operates as the holding company for The PrivateBank and Trust Company that provides business and personal financial services to middle-market companies and business owners, executives, entrepreneurs, and families in the United States. As of December 31, 2011, the company operated 18 branch locations in the Chicago market; and 10 branch locations in the Atlanta, Detroit, Kansas City, Milwaukee, and St. Louis metropolitan areas, as well as 29 automated teller machines located at its banking facilities. PrivateBancorp, Inc. was founded in 1989 and is headquartered in Chicago, Illinois.
4) Synovus Financial Corp. (SNV)
|Industry||Regional - Mid-Atlantic Banks|
|1-Year Projected Earnings Per Share Growth Rate||70.00%|
|Price/Book Value Ratio||0.68|
|Price/Cash Flow Ratio||4.33|
Synovus Financial Corporation a financial services and bank holding company, provides integrated financial services in Georgia, Alabama, South Carolina, Florida, and Tennessee. Its integrated financial services include commercial and retail banking, financial management, insurance, and mortgage services. Synovus Financial Corporation was founded in 1888 and is headquartered in Columbus, Georgia.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 09/21/2012.