3 High-Growth, Small-Cap Technology Stocks With Strong Earnings

Includes: ADTN, CY, INVN
by: ZetaKap

Small-cap stocks tend to offer investors greater growth opportunities than large-cap alternatives, although this comes with its fair share of added risk. Are you looking for small caps? Interested in technology companies? Looking for ways to dig deeper into a company's profitability? Do you prefer high-growth stocks? If so, here's a list you might be interested in.

EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. EPS growth rates help investors identify stocks that are increasing or decreasing in profitability. This profitability metric is generally a key driver in the price of the stock as it directly correlates to the profitability of the company as a whole.

The Operating Profit Margin is a profitability ratio that measures the effectiveness of the company's operating efficiency. This metric allows investors to see how much profit is left after all variable costs are covered. If the company's margin is increasing over time this means that it is earning more per dollar of sales. Finding trends in the Operating Profit Margin helps investors identify companies that are improving profitability over time and managing the economic landscape better than competitors.

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.

We first looked for small-cap technology stocks. We then screened for businesses that have shown strong bottom line growth over the last year (1-year fiscal EPS growth rate>10%) (1-year operating margin>15%). From here, we then looked for companies with projected high growth, measured by 1-year projected EPS growth above 25%.

Do you think these small-cap stocks will trade at a higher valuation? Use our list along with your own analysis.

InvenSense, Inc. (NYSE:INVN)

Sector: Technology
Industry: Semiconductor Equipment & Materials
Market Cap: $887.33M
Beta: -

InvenSense, Inc. has a Earnings Per Share Growth Rate of 1713.57%; an Operating Profit Margin of 30.74%; and a 1-Year Projected Earnings Per Share Growth Rate of 39.34%. The short interest was 12.90% as of 05/15/2012. InvenSense, Inc. designs, develops, markets, and sells micro-electro-mechanical systems (MEMS) gyroscopes for motion processing solutions in consumer electronics. The company delivers next-generation motion processing based on its advanced multi-axis gyroscope technology by targeting applications in video game devices, handsets and tablet devices, digital still and video cameras, digital television and set-top box remote controls, 3D mice, portable navigation devices, and household consumer and industrial devices.

Spansion Inc. (CODE)

Sector: Technology
Industry: Semiconductor- Memory Chips
Market Cap: $686.89M
Beta: -

Spansion Inc. has a Earnings Per Share Growth Rate of 238.98%; Operating Profit Margin of 25.54%; and 1-Year Projected Earnings Per Share Growth Rate of 81.91%. The short interest was 4.73% as of 05/15/2012. Spansion Inc. engages in the design, development, manufacture, and sale of flash memory semiconductors worldwide. It offers flash memory solutions for microprocessors, controllers, and other programmable semiconductors that run applications in a range of electronic systems, including automotive and industrial, computing and communications, and consumer and gaming. The company's product designs are primarily based on its proprietary two-bit-per-cell MirrorBit technology.


Sector: Technology
Industry: Communication Equipment
Market Cap: $1.93B
Beta: 1.28

ADTRAN Inc. has a Earnings Per Share Growth Rate of 18.71%; Operating Profit Margin of 23.27%; and 1-Year Projected Earnings Per Share Growth Rate of 41.14%. The short interest was 9.52% as of 05/15/2012. ADTRAN, Inc. designs, manufactures, markets, and services communications network solutions that enable voice, data, video, and Internet communications across wireline and wireless networks worldwide. Its Carrier Networks division provides fiber and copper-based solutions for service providers to deliver voice, data and video services to customers' premises and mobile network cell sites. Its products enable services, such as voice, VoIP, IP television, RF video, high speed Internet access, and data services based upon Ethernet, frame relay, TDM, and ATM networks, connecting the network with user components, such as switches, routers, gateways, integrated access devices (IADs), private branch exchanges (PBXs), and telephone key systems.

*Company profiles were sourced from Finviz. Financial data was sourced from Finviz and Google Finance.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.