Revision: Small Cap Value Earnings Portfolio

by: Scott's Investments

After some thought, I've decided to tweak the criteria for the Small Cap Earnings Surprise Portfolio I track on the right hand side of the blog using Google Docs. Last months results can be seen here. Rather then use price to book as a criteria, I've decided to replace it with a low PEG. The rationale for using PEG as opposed to Price/Book is that the screen is primarily looking for small cap companies that have a recent history of earnings surprises. A favorable PEG ratio better captures the "essence" of the screen, which is earnings, and seeks companies priced reasonably relative to earnings growth. However, if you have an interest in continuing to screen for the same criteria in my previous articles you can do so using many of the free tools/sites I frequently cite.

The full results of the screen looks for a low PEG, recent earnings surprises, and small market capitalization. I further narrow the list based on additional fundamental factors to 10 stocks. The list, as always, is not a specific portfolio but a recommendation for further research. The current list of stocks is below:

Ticker Name Free Trend Analysis Last MktCap
LINC Lincoln Educational Services Here 19.51 527.54
JOEZ Joe's Jeans Inc. Here 2.05 126.31
CNU Continucare Corporation Here 4.42 265.02
OTCPK:FUQI Fuqi International, Inc. Here 16.88 466.37
JST Jinpan International Limited Here 48 394.06
NSIT Insight Enterprises, Inc. Here 13.09 600.69
CRMT America's Car-Mart, Inc. Here 24.49 287.32
AAWW Atlas Air Worldwide Holdings, Here 38.41 810.38
STRL Sterling Construction Company Here 19.59 260.32
HITK Hi-Tech Pharmacal Co. Here 20.87 252.15

Author's Disclosure: No positions