5 Small Cap, Low-Debt Stocks Projected For Growth

by: ZetaKap

We all know what can happen when growth gets out of hand. Management may make haphazard and hasty decisions, employees are hired without receiving full training or mentoring, quality control can be spotty, and communication tends to break down. On the other hand, when a company is poised for moderate growth over a longer period, capacity building can be done much more intentionally, and on an as-needed basis. With this in mind, we focused on small cap stocks that have projected EPS growth rates above 25% for the next five years. Further, none of these companies is laden with debt, which provides solid footing for that growth to thrive. Compare our findings below to see if any of the small cap stocks that made our list meet your standards.

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.

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.

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 create substantial trouble.

We first looked for small cap stocks. We then looked for companies that have high future earnings per share growth forecasts(5-year projected EPS Growth Rate>25%). We then looked for companies that operate with little to no long term debt (Long Term D/E Ratio<.1). From here, we then looked for companies that have maintained a sound capital structure (D/E Ratio<.1). We did not screen out any sectors.

Do you think these small-cap stocks have strong enough fundamentals to move higher? Please use our list to assist with your own analysis.

1) Neurocrine Biosciences Inc. (NASDAQ:NBIX)

Sector Healthcare
Industry Drug Manufacturers - Major
Market Cap $529.31M
Beta 0.37

NBIX stock chart

Key Metrics

5-Year Projected Earnings Per Share Growth Rate 69.00%
Long Term Debt/Equity Ratio 0.00
Debt/Equity Ratio 0.00
Short Interest 4.48%

Neurocrine Biosciences, Inc. engages in the discovery, development, and commercialization of drugs for the treatment of neurological and endocrine-related diseases and disorders in the United States. It develops drugs for endometriosis, stress-related disorders, pain, tardive dyskinesia, uterine fibroids, diabetes, insomnia, and other neurological and endocrine-related diseases and disorders. Neurocrine Biosciences, Inc. was founded in 1992 and is headquartered in San Diego, California.

2) ReachLocal, Inc. (NASDAQ:RLOC)

Sector Services
Industry Advertising Agencies
Market Cap $356.64M
Beta -

RLOC stock chart

Key Metrics

5-Year Projected Earnings Per Share Growth Rate 46.67%
Long Term Debt/Equity Ratio 0.00
Debt/Equity Ratio 0.00
Short Interest 4.50%

ReachLocal, Inc. provides a suite of online marketing and reporting solutions to small and medium-sized businesses (SMBs) primarily in the United States, Canada, Australia, the United Kingdom, India, the Netherlands, Germany, and Japan. The company's products include ReachSearch, a search engine marketing product; ReachDisplay, a display advertising and remarketing product; ReachCast, a solution that builds and optimizes Web presence for the purpose of driving online search discovery, powering reputation management, and managing social media marketing; and remarketing and retargeting products. It also provides a suite of digital marketing solutions comprising TotalTrack, TotalLiveChat, TotalVideoNow, and TotalBannerNow to address specific marketing needs, such as lead optimization, online analytics, and digital creative solutions. ReachLocal, Inc. was founded in 2003 and is headquartered in Woodland Hills, California.

3) Rubicon Minerals Corporation (RBY)

Sector Basic Materials
Industry Gold
Market Cap $1.08B
Beta 1.16

RBY stock chart

Key Metrics

5-Year Projected Earnings Per Share Growth Rate 63.00%
Long Term Debt/Equity Ratio 0.00
Debt/Equity Ratio 0.00
Short Interest 1.90%

Rubicon Minerals Corporation, a mineral exploration company, engages in the acquisition, exploration, and development of gold and base-metal properties in Canada and the United States. The company primarily focuses on the Phoenix Gold Project located in Ontario, Canada. Rubicon Minerals Corporation was founded in 1996 and is headquartered in Vancouver, Canada.

4) Cornerstone OnDemand, Inc. (NASDAQ:CSOD)

Sector Technology
Industry Multimedia & Graphics Software
Market Cap $1.54B
Beta -

CSOD stock chart

Key Metrics

5-Year Projected Earnings Per Share Growth Rate 40.63%
Long Term Debt/Equity Ratio 0.05
Debt/Equity Ratio 0.10
Short Interest 6.35%

Cornerstone OnDemand, Inc. provides learning and talent management solutions delivered as software-as-a-service. The company offers three integrated cloud-based solutions for learning management, performance management, and extended enterprise. Cornerstone OnDemand, Inc. was founded in 1999 and is headquartered in Santa Monica, California.

5) Enduro Royalty Trust (NYSE:NDRO-OLD)

Sector Basic Materials
Industry Independent Oil & Gas
Market Cap $607.86M
Beta -

NDRO stock chart

Key Metrics

5-Year Projected Earnings Per Share Growth Rate 71.70%
Long Term Debt/Equity Ratio 0.00
Debt/Equity Ratio 0.00
Short Interest 0.15%

Enduro Royalty Trust focuses on acquiring and owning a net profits interest representing the right to receive an 80% of the net profits from the sale of oil and natural gas production from certain properties located in the states of Texas, Louisiana, and New Mexico held by Enduro Resource Partners LLC. The company was founded in 2011 and is based in Austin, Texas. Enduro Royalty Trust is a subsidiary of Enduro Resource Partners LLC.

*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 10/01/2012.

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.