The Best Small Cap Stocks To Buy Now

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Includes: ABAX, ADUS, AFFX, ALOG, ANAC, ANIP, AOBC, ASTE, BABY, BJRI, CNMD, CTRN, DEPO, DIOD, DYAX, EBIX, ECOL, ELLI, EXAM, FARO, FORM, HBIO, IART, IRWD, LGND, MATW, MTSI, NLNK, PFPT, PMC, PRSC, QLGC, RRGB, SGMO, SILC, SNCR, SNHY
by: Todd Campbell

Summary

The top scoring small cap sector is consumer goods.

The best scoring small cap industry is specialized semiconductor.

Semiconductor seasonal tailwinds end in April.

The best scoring small caps from our weekly reports have outpaced the Russell 2000 index ETF by a median 6.51% in the following year.

The average small cap score across our universe is 56.21, which is below the four-week moving average score of 56.72. The average small cap stock is trading -23.96% below its 52-week high, 5.46% above its 200 DMA, and has 8.05 days to cover held short.

The best scoring small cap sector is consumer goods. Utilities, financials, technology, and services also score above average. Healthcare and industrial goods score in line. Basic materials score below average.

The following are the best scoring stocks across small cap. An audio overview of our scoring methodology is available here, but as a quick reminder, scores are based on forward earnings growth, historical trends in reporting earnings that beat Wall Street estimates, insider buying by officers (not directors), short- and long-term institutional money flow, forward valuation relative to historical valuation, contra-trend short interest analysis, and quarterly seasonality over the past decade.

SM CAP 4/2/2015 4 Week MA
Company Name Symbol Sector SCORE SCORE
BEST
Ellie Mae ELLI TECHNOLOGY 110 112.5
Matthews Intl Corp Cl A MATW INDUSTRIAL GOODS 105 97.5
Synchronoss Tech SNCR TECHNOLOGY 105 97.5
Anacor Pharma ANAC HEALTHCARE 100 98.75
Natus Medical BABY HEALTHCARE 100 98.75
Dyax Corp DYAX HEALTHCARE 100 98.75
US Ecology ECOL INDUSTRIAL GOODS 100 97.5
NewLink Genetics NLNK HEALTHCARE 100 100
Proofpoint PFPT TECHNOLOGY 100 98.75
Red Robin Gourmet Burgers Inc RRGB SERVICES 100 98.75
Addus HomeCare ADUS HEALTHCARE 95 87.5
Affymetrix Inc AFFX TECHNOLOGY 95 97.5
BJ's Restaurants BJRI SERVICES 95 97.5
CONMED CNMD HEALTHCARE 95 96.25
DepoMed DEPO HEALTHCARE 95 97.5
Diodes Inc DIOD TECHNOLOGY 95 97.5
ExamWorks EXAM SERVICES 95 83.75
Harvard Bio HBIO HEALTHCARE 95 93.75
Ironwood IRWD HEALTHCARE 95 96.25
M/A Com Tech Sol. Hldng MTSI TECHNOLOGY 95 97.5
QLogic QLGC TECHNOLOGY 95 97.5
Smith & Wesson Hldg. SWHC CONSUMER GOODS 95 96.25
Abaxis Inc. ABAX HEALTHCARE 90 87.5
Analogic Corp ALOG TECHNOLOGY 90 88.75
ANI Pharm ANIP HEALTHCARE 90 91.25
Astec Industries Inc ASTE INDUSTRIAL GOODS 90 92.5
Citi Trends CTRN SERVICES 90 81.25
Ebix Inc EBIX TECHNOLOGY 90 92.5
FARO Tech FARO TECHNOLOGY 90 80
FormFactor Inc. FORM TECHNOLOGY 90 91.25
Integra LifeSciences IART HEALTHCARE 90 88.75
Ligand Pharm LGND HEALTHCARE 90 90
PharMerica PMC SERVICES 90 88.75
Providence Service PRSC HEALTHCARE 90 88.75
Sangamo Bio SGMO HEALTHCARE 90 92.5
Silicom LTD SILC TECHNOLOGY 90 90
Sun Hydraulics Inc SNHY INDUSTRIAL GOODS 90 73.75

The next chart shows historical small cap score, by sector, since 2010.

Over the past decade, the following small cap stocks have posted the best seasonality. Each has gained ground in at least nine of the past 10 years.

Specialized semiconductor (QLGC, SIGM, MPWR) is the top scoring small cap industry. Since inception, April is the third best month for average returns for the XSD, with the ETF returning an average 3.49% in the month. Application software (ELLI, SNCR, PRFT, QLYS) and business software (EBIX, NTCT, TSYS, PRFT) are also strong scoring. Software demand continues to be supported by economic growth and the electrification of process and practice management. Restaurant (RRGB, BJRI, SONC) foot traffic and same store sales growth continue to support revenue and profit. The Nat'l Restaurant Association's restaurant performance index remains bullish with a reading of 102.7 in January. Demand for scientific and technical instruments (AFFX, FARO, ALOG, PRCP, FLDM) is buoyed by an improving market for research funding. European QE could further boost sales. The NIH budget for research spending could increase by as much as $1 billion in FY16.

No small cap basics industries score above average. In consumer goods, the best scoring groups are home furnishing (SCSS, STLY) and textiles (BEBE, PERY, RCKY). Cotton "A" Index prices averaged 69.84 cents per pound in February, down from 94.05 cents per pound a year ago.

P&C insurers (STFC, MIG) and savings & loans (PROV, BRKL, BANR, OCFC) are the top industries in financials. P&C insurance rates were up 1% year-over-year in February, with auto increasing by 2%, according to Market Scout. Across healthcare, concentrate on specialized health services (PRSC, USPH, IPCM), home healthcare (ADUS, CHE, AFAM), and medical appliances (BABY, CNMD, GB, NXTM, CUTR, ABMD). No industrial goods group's score above average - go up in market cap where aerospace is strong. The best services industries are restaurants, broadcasting (EVC, GTN, ETM), and resorts & casinos (PENN, BYD). In the most recent week, U.S. average daily room rates were 6.6% higher than a year ago and occupancy grew by 3.2%. As a result, revenue per available room, RevPAR, grew 10% versus a year ago. That is above February's 8% increase in RevPAR. In technology, concentrate on specialized semiconductors, application software, and scientific & technical instruments.

SMALL CAP INDUSTRY SCORE

4/2/2015

Sector

INDUSTRY

Score

BASIC MATERIALS

INDUSTRIAL METALS & MINERALS

55.00

BASIC MATERIALS

STEEL & IRON

42.86

BASIC MATERIALS

INDEPENDENT OIL & GAS

35.83

BASIC MATERIALS

OIL & GAS DRILLING & EXPLORATION

31.67

BASIC MATERIALS

GOLD

28.00

CONSUMER GOODS

HOME FURNISHING & FIXTURES

70.00

CONSUMER GOODS

TEXTILES

67.50

CONSUMER GOODS

PROCESSED & PACKAGED GOODS

55.00

CONSUMER GOODS

AUTO PARTS

48.00

FINANCIALS

PROPERTY & CASUALITY INSURANCE

72.00

FINANCIALS

SAVINGS & LOANS

67.22

FINANCIALS

INVESTMENT BROKERAGE

65.00

FINANCIALS

REGIONAL BANKS

55.00

FINANCIALS

CREDIT SERVICES

51.67

HEALTHCARE

SPECIALIZED HEALTH SERVICES

67.14

HEALTHCARE

HOME HEALTH CARE

60.83

HEALTHCARE

MEDICAL APPLIANCES & EQUIPMENT

60.74

HEALTHCARE

MEDICAL INSTRUMENTS & SUPPLIES

60.48

HEALTHCARE

DRUG MANUFACTURERS

58.85

HEALTHCARE

BIOTECHNOLOGY

51.47

HEALTHCARE

DRUG RELATED PRODUCTS

45.00

INDUSTRIAL GOODS

GENERAL BUILDING MATERIALS

56.67

INDUSTRIAL GOODS

AEROSPACE/DEFENSE PRODUCTS & SERVICES

56.25

INDUSTRIAL GOODS

INDUSTRIAL ELECTRICAL EQUIPMENT

53.75

INDUSTRIAL GOODS

HEAVY CONSTRUCTION

40.00

SERVICES

RESTAURANTS

76.00

SERVICES

BROADCASTING

66.00

SERVICES

RESORTS AND CASINOS

65.00

SERVICES

APPAREL STORES

64.55

SERVICES

CATALOG & MAIL ORDER HOUSES

60.00

SERVICES

BUSINESS SERVICES

59.00

SERVICES

STAFFING & OUTSOURCING SERVICES

57.00

SERVICES

MANAGEMENT SERVICES

56.25

SERVICES

MARKETING SERVICES

51.67

SERVICES

SPECIALTY RETAIL, OTHER

51.67

SERVICES

RAILROADS

48.33

SERVICES

TRUCKING

48.33

SERVICES

EDUCATION & TRAINING SERV

38.33

TECHNOLOGY

SEMICONDUCTOR-SPECIALIZED

85.00

TECHNOLOGY

APPLICATION SOFTWARE

77.22

TECHNOLOGY

SCIENTIFIC & TECHNICAL INSTRUMENTS

75.00

TECHNOLOGY

BUSINESS SOFTWARE & SERVICES

73.13

TECHNOLOGY

SEMICONDUCTOR- INTEGRATED CIRCUITS

71.25

TECHNOLOGY

SEMICONDUCTOR EQUIPMENT & MATERIALS

71.00

TECHNOLOGY

COMPUTER PERIPHERALS

58.33

TECHNOLOGY

NETWORKING & COMMUNICATION DEVICES

55.00

TECHNOLOGY

PRINTED CIRCUIT BOARDS

53.75

TECHNOLOGY

DIVERSIFIED ELECTRONICS

51.00

TECHNOLOGY

COMMUNICATION EQUIPMENT

47.50

TECHNOLOGY

INTERNET SOFTWARE & SERVICES

44.38

TECHNOLOGY

INFORMATION TECHNOLOGY SERVICES

42.50

TECHNOLOGY

INTERNET INFORMATION PROVIDER

40.00

TECHNOLOGY

INTERNET SERVICE PROVIDERS

25.00

TECHNOLOGY

WIRELESS COMMUNICATIONS

22.50

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

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