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  • 7 High-Growth Small Cap Stocks With Minimal Debt 0 comments
    Sep 12, 2012 11:29 AM | about stocks: AFFY, CPST, DDC, KFRC, PCBC-OLD, SVN, TRNX

    At the small cap level, investors can realize impressive gains when they get in on a company at the onset of a growth spurt. To find stocks that appear to be ripe for expansion, we narrowed our focus today to small caps that have EPS growth rates above 25% for the next five years. But growth projections alone are not enough of an indicator. For our secondary screen we analyzed debt ratios to find companies that have minimal debt. Having little to zero debt helps a company keep the focus on building the business rather than paying back what it owes. Take a look at the graphs and summaries below to learn more about the small cap stocks we found.

    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 looked for companies that operate with little to no long term debt (Long Term D/E Ratio<.1). We then looked for businesses that have high future earnings per share growth forecasts(5-year projected EPS Growth Rate>25%). We did not screen out any sectors.

    Do you think these small-cap stocks will go up in valuation? Use our list along with your own analysis.

    1) Affymax, Inc. (OTCPK:AFFY)

    Sector Healthcare
    Industry Biotechnology
    Market Cap $662.64M
    Beta 1.27

    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%

    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.

    2) Capstone Turbine Corp. (NASDAQ:CPST)

    Sector Industrial Goods
    Industry Industrial Electrical Equipment
    Market Cap $302.57M
    Beta 1.65

    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%

    Capstone Turbine Corporation engages in developing, manufacturing, marketing, and servicing microturbine technology solutions for use in stationary distributed power generation applications worldwide. The company primarily offers microturbine units, subassemblies, components, and various accessories for applications, including cogeneration comprising combined heat and power, and integrated combined heat and power, as well as combined cooling, heat, and power; and renewable energy, natural resources, and critical power supply.

    Its microturbines are also used as battery charging generators for hybrid electric vehicle applications. The company 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. In addition, it remanufactures microturbine engines; and provides after-market parts and services, as well as maintenance, and factory and on-site training services. The company sells its products primarily through distributors and original equipment manufacturers. Capstone Turbine Corporation was founded in 1988 and is headquartered in Chatsworth, California.

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

    Sector Services
    Industry Lodging
    Market Cap $469.31M
    Beta -

    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%

    7 Days Group Holdings Limited, together with its subsidiaries, engages in the operation of hotels under the brand name 7 Days Inn in the People's Republic of China. It provides accommodations and services to business and leisure travelers. As of March 31, 2012, the company had 1,044 hotels in operation consisting of 417 leased-and-operated hotels and 627 managed hotels representing a total of 103,906 rooms covering 162 cities. 7 Days Group Holdings Limited was founded in 2004 and is headquartered in Guangzhou, the People's Republic of China.

    4) Harry Winston Diamond Corporation (HWD)

    Sector Basic Materials
    Industry Nonmetallic Mineral Mining
    Market Cap $1.04B
    Beta 2.22

    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%

    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.

    5) Pacific Capital Bancorp (OTCPK:PCBC)

    Sector Financial
    Industry Regional - Pacific Banks
    Market Cap $1.51B
    Beta 0.94

    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%

    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.

    6) Kforce Inc. (NASDAQ:KFRC)

    Sector Services
    Industry Staffing & Outsourcing Services
    Market Cap $422.49M
    Beta 1.52

    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%

    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.

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

    Sector Healthcare
    Industry Medical Instruments & Supplies
    Market Cap $720.55M
    Beta -

    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%

    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.

    *Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 09/05/2012.

    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.

    Stocks: AFFY, CPST, DDC, KFRC, PCBC-OLD, SVN, TRNX
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