7 Small Cap Stocks Holding Low Debt Ratios And Positive Analyst Ratings

by: ZetaKap

Many investors seek small cap stocks as growth opportunities, but not all small-caps will grow to larger-cap status. To find small caps that are positioned for growth, it makes sense to screen for those that have low leverage ratios, since having this trait leaves a company free to decide how they spend their cash, which could on strategic acquisitions, smart growth investments, or costly yet innovative research and development. Today we screened for smaller companies that have minimal debt, along with positive analyst ratings. When analysts on average favor a company, it signals that a company is doing a variety of things right for itself, which we think warrants further investigation and analysis. If you are of the same mindset, you will like the list of small cap companies that we arrived at today.

The Debt/Equity Ratio illustrates how aggressively a company is financing its growth via debt. The more debt financing that is used in a capital structure, the more volatile earnings can become due to the additional interest expense. Should a company's potentially enhanced earnings fail to exceed the cost associated with debt financing over time, this can lead the company toward substantial trouble.

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.

We first looked for small cap stocks. We then looked for businesses that operate with little to no debt (D/E Ratio<.1). We then looked for companies that have maintained a sound long term capital structure (Long Term D/E Ratio<.1). Next, we then screened for businesses that analysts rate as "Buy" or "Strong Buy" (mean recommendation < 3). We did not screen out any sectors.

Do you think these small-cap stocks hold solid value? Please use our list to assist with your own analysis.

1) Dynavax Technologies Corporation (NASDAQ:DVAX)

Sector Healthcare
Industry Drug Manufacturers - Other
Market Cap $650.64M
Beta 2.83

DVAX stock chart

Key Metrics

Debt/Equity Ratio 0.10
Long Term Debt/Equity Ratio 0.00
Analysts' Rating 1.30
Short Interest 11.06%

Dynavax Technologies Corporation, a clinical-stage biopharmaceutical company, discovers and develops novel products to prevent and treat infectious and inflammatory diseases. It develops product candidates based on the use of immunostimulatory sequences and immunoregulatory sequences. The company's lead product candidate is HEPLISAV, a Phase III investigational adult hepatitis B vaccine.

2) Calgon Carbon Corporation (NYSE:CCC-OLD)

Sector Industrial Goods
Industry Pollution & Treatment Controls
Market Cap $786.05M
Beta 0.73

CCC stock chart

Key Metrics

Debt/Equity Ratio 0.10
Long Term Debt/Equity Ratio 0.00
Analysts' Rating 1.80
Short Interest 3.97%

Calgon Carbon Corporation provides services and solutions for purifying water and air, food, beverage, and industrial process streams primarily in the United States, Europe, and Japan. The Company operates in three segments: Activated Carbon and Service, Equipment, and Consumer. The Activated Carbon and Service segment manufactures granular and powder activated carbon for use in applications to remove organic compounds from liquids, gases, water, and air.

3) Knight Transportation Inc. (NYSE:KNX)

Sector Services
Industry Trucking
Market Cap $1.19B
Beta 0.65

KNX stock chart

Key Metrics

Debt/Equity Ratio 0.10
Long Term Debt/Equity Ratio 0.10
Analysts' Rating 2.30
Short Interest 6.74%

Knight Transportation, Inc., together with its subsidiaries, operates as a short to medium-haul truckload carrier of general commodities in the United States. It provides asset-based dry van truckload, temperature-controlled truckload, and dedicated truckload services; drayage services between ocean ports or rail ramps, and shipping docks; rail intermodal services; and truckload freight brokerage services. The company also offers non-asset-based services, including rail intermodal and truckload brokerage services.

4) Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX)

Sector Healthcare
Industry Biotechnology
Market Cap $1.11B
Beta 1.74

LXRX stock chart

Key Metrics

Debt/Equity Ratio 0.10
Long Term Debt/Equity Ratio 0.09
Analysts' Rating 2.10
Short Interest 3.38%

Lexicon Pharmaceuticals, Inc., a biopharmaceutical company, focuses on the discovery and development of drug candidates for the treatment of various human diseases. The company utilizes gene knockout technologies and an integrated platform of medical technologies to systematically study the physiological and behavioral functions of approximately 5,000 genes in mice and assessed the utility of the proteins encoded by the corresponding human genes as drug targets. Its portfolio of orally-delivered small molecule compounds that have completed or are presently conducting phase 2 clinical trails includes LX4211 for the treatment of type 2 diabetes; LX1031 for the treatment of irritable bowel syndrome and other gastrointestinal disorders; LX1032 for the treatment of the symptoms associated with carcinoid syndrome; and LX2931 for the treatment of rheumatoid arthritis and other autoimmune diseases.

5) Enstar Group Limited (NASDAQ:ESGR)

Sector Financial
Industry Property & Casualty Insurance
Market Cap $1.59B
Beta 1.22

ESGR stock chart

Key Metrics

Debt/Equity Ratio 0.09
Long Term Debt/Equity Ratio 0.09
Analysts' Rating 1.00
Short Interest 2.76%

Enstar Group Limited acquires and manages insurance and reinsurance companies in run-off and portfolios of insurance and reinsurance businesses in run-off. It also offers management and consultancy services, claims inspection services, and reinsurance collection services to its affiliates and third-party clients. The company serves multinational company clients in Bermuda, the United States, Europe, and Australia.

6) Apogee Enterprises, Inc. (NASDAQ:APOG)

Sector Industrial Goods
Industry General Building Materials
Market Cap $454.29M
Beta 1.80

APOG stock chart

Key Metrics

Debt/Equity Ratio 0.10
Long Term Debt/Equity Ratio 0.10
Analysts' Rating 1.80
Short Interest 3.22%

Apogee Enterprises, Inc., together with its subsidiaries, engages in the design and development of glass products, services, and systems primarily in North America, Europe, and Brazil. The company operates in two segments, Architectural Products and Services, and Large-Scale Optical Technologies. The Architectural Products and Services segment designs, engineers, fabricates, installs, maintains, and renovates the walls of glass, windows, storefront, and entrances comprising the outside skin of commercial and institutional buildings.

7) Super Micro Computer, Inc. (NASDAQ:SMCI)

Sector Technology
Industry Networking & Communication Devices
Market Cap $511.16M
Beta 1.46

SMCI stock chart

Key Metrics

Debt/Equity Ratio 0.10
Long Term Debt/Equity Ratio 0.06
Analysts' Rating 2.00
Short Interest 7.29%

Super Micro Computer, Inc., together with its subsidiaries, develops and provides high performance server solutions based on modular and open-standard architecture. The company offers a range of rackmount, workstation, storage, graphic processing unit, and blade server systems, as well as subsystems and accessories used by distributors, original equipment manufacturers, and end customers to assemble server systems. It provides server options with single, dual, and quad CPU capability supporting Intel Pentium and Xeon multi-core architectures; and server systems based on AMD dual and quad Opteron.

*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 08/21/2012.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.