5 Low-Debt, Small-Cap Stocks With Growth In The Picture

by: ZetaKap

Many successful companies understand how important it is to manage expectations of their investors. In many instances, this means not over promising, under delivering, and not incurring unmanageable debt. When a company has strong, yet reasonable growth goals and minimal to zero debt, it places it in an advantageous position for steadily increasing capacity without resorting to harmful compromises in terms of quality and infrastructure. With this in mind, we focused on small-cap stocks that have projected EPS growth rates above 25% for the next five years and have healthy debt ratios. Use the data below to begin your own assessment of these small-cap stocks.

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 with its available capital. By using this ratio, investors can identify the amount of leverage utilized by a specific company and compare it with 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.

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.

We first looked for small-cap stocks. We next screened for businesses that have maintained a sound capital structure (D/E Ratio<.1). We next screened for businesses that have maintained a sound long-term capital structure (Long Term D/E Ratio<.1). From here, we then looked for companies that have expected earnings per share growth of more than 25 percent for the next five years (5-year projected EPS Growth Rate>25%). We did not screen out any sectors.

Do you think these small-cap stocks have a positive future in store? Please use our list to assist with your own analysis.

1) Kforce Inc. (NASDAQ:KFRC)

Sector Services
Industry Staffing & Outsourcing Services
Market Cap $431.31M
Beta 1.57

KFRC stock chart

Key Metrics

Debt/Equity Ratio 0.06
Long Term Debt/Equity Ratio 0.06
5-Year Projected Earnings Per Share Growth Rate 30.00%
Short Interest 3.40%

Kforce Inc., together with its subsidiaries, provides professional and technical staffing services and solutions in the United States. It operates in five segments: Technology, Finance and Accounting, Clinical Research, Health Information Management, and Government Solutions. Kforce Inc. was founded in 1994 and its headquarters is in Tampa, Florida.

2) Guidance Software, Inc. (NASDAQ:GUID)

Sector Technology
Industry Application Software
Market Cap $303.66M
Beta 1.21

GUID stock chart

Key Metrics

Debt/Equity Ratio 0.03
Long Term Debt/Equity Ratio 0.01
5-Year Projected Earnings Per Share Growth Rate 40.60%
Short Interest 6.57%

Guidance Software, Inc. provides digital investigative solutions to government agencies and corporations primarily in the Americas, Europe, the Middle East, Africa, and Asia/the Pacific Rim. It offers EnCase platform for organizations to search, collect, and analyze electronically stored information to address human resources matters, litigation matters, allegations of fraud, suspicious network endpoint activity, and defend their data assets. Guidance Software, Inc. was founded in 1997 and its headquarters is in Pasadena, California.

3) MYR Group, Inc. (NASDAQ:MYRG)

Sector Industrial Goods
Industry General Contractors
Market Cap $414.91M
Beta 0.93

MYRG stock chart

Key Metrics

Debt/Equity Ratio 0.04
Long Term Debt/Equity Ratio 0.00
5-Year Projected Earnings Per Share Growth Rate 29.70%
Short Interest 2.40%

MYR Group Inc., through its subsidiaries, operates as a specialty contractor serving the electrical infrastructure market in the United States. The company operates in two segments, Transmission and Distribution, and Commercial and Industrial. MYR Group Inc. was founded in 1891 and its headquarters is in Rolling Meadows, Illinois.

4) Bona Film Group Limited (NASDAQ:BONA)

Sector Services
Industry Entertainment - Diversified
Market Cap $310.08M
Beta -

BONA stock chart

Key Metrics

Debt/Equity Ratio 0.05
Long Term Debt/Equity Ratio 0.00
5-Year Projected Earnings Per Share Growth Rate 33.20%
Short Interest 0.10%

Bona Film Group Limited engages in the distribution of films in the People's Republic of China and internationally. Its film distribution activities include film sourcing, which includes identifying film projects with commercial potential and securing film distribution rights; print and marketing that includes coordinating the distribution of film prints to theater circuits, as well as conducting marketing and publicity campaigns to promote the films to their target audiences; exhibition, which comprises negotiating the terms of exhibitions of films in domestic and international movie theaters, as well as through non-theatrical distribution channels; and film advertising that includes the sale of advertising time immediately prior to the start of the theatrical screening of a film, in-film product placements, and cross-promotion campaigns. Bona Film Group Limited was founded in 2003 and its headquarters is in Beijing, the People's Republic of China.

5) The Active Network, Inc. (NYSE:ACTV)

Sector Technology
Industry Application Software
Market Cap $591.53M
Beta -

ACTV stock chart

Key Metrics

Debt/Equity Ratio 0.04
Long Term Debt/Equity Ratio 0.00
5-Year Projected Earnings Per Share Growth Rate 31.67%
Short Interest 6.47%

The Active Network, Inc. provides organization-based cloud computing applications services to business customers in North America, Europe, and internationally. The company offers ActiveWorks, an organization-based cloud computing platform, which transforms the way organizers record, track, manage, and share information regarding activities and events. The company was formerly known as Racegate.com, Inc. and changed its name to The Active Network, Inc. in May 2001. The Active Network, Inc. was founded in 1998 and its headquarters is in San Diego, California.

Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 10/18/2012.

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.