It has been a very successful year for investors as the market continues to add on its 28 percent year to date gains. It is a time of year to also be with family and reconnect with loved ones as we celebrate the holidays. Investors should also take this opportunity to find new stocks to add to your watch list and take profits where applicable. One such stock that I would suggest you take a look at is Wayside Technology Group, Inc. (NASDAQ: WSTG).
Wayside Technology Group is a wholesaler of various software and hardware products for "virtualization, networking, software development, database modeling, security, and other technical domains." At first glance, you may be saying a wholesaler of computers and software is not something that would normally seem enticing given lagging PC sales over the past few years, but I urge you to read on.
Turning to the fundamentals, Wayside Technology is a micro-cap stock with a market cap of only $58.86 million and rated as a "strong buy" from analysts. Price to earnings is undervalued compared to Nasdaq at 10.6 and forward price to earnings is at 9.33. PEG, is a deeply discounted .48, price to sales is undervalued at .20, price to book is at 1.78, and price to cash is at 4. The technology services company has no debt and offers a whopping annual dividend of 5.13 percent. Earnings are expected to contract slightly by .80 percent this year, rise 15.45 percent next year, and rise 22 percent over the next five years. Management efficiency ratios are decent, but could use some work with return on assets of 7 percent, return on equity of 17.3 percent, and return on investment of 15.5 percent. Margins need work with gross margin of 8 percent, operating margin of 2.7 percent, and profit margin of 1.9 percent.
Insiders currently own 7.3 percent of the float, while institutional buyers have scooped up 26 percent of Wayside Technology shares. This shows that institutional buyers do have interest in this stock and should be an important metric to monitor should you choose to place this stock on your watch list.
There are certainly some impressive figures in Wayside's fundamentals that shouldn't be overlooked. Price to earnings ratios are undervalued as is earnings growth, and price compared to sales. No debt is always ideal for investors and the company as they can afford to pay that sweet 5.13 percent dividend and make acquisition.
The bottom line here is that investors who are looking for a moderately risky micro-cap stock with solid overall economic outlook should look at this stock as a possible candidate. Remember to conduct your own research to determine whether or not micro-caps are a suitable investment for your portfolio.