Small cap stocks have traditionally outperformed all other asset classes. Small cap value is the best performing asset class over the years. There is also evidence that small cap value stocks lead the market when coming out of recessions. As we look forward to improving economy in 2012, it is important that we keep an healthy allocation to undervalued small cap stocks in our portfolio.
Here at Value Stock Guide, we generally tend to favor small cap stocks. This screen below is a shortlist of some of the best values in the small caps I see in the stock market right now. You may want to download the Excel sheet attached to this post and do your own due diligence as small cap stocks generally carry greater company risk than other asset classes. These stocks have been picked for reasonable Price to Earnings, Price to Book Value, Earnings Growth and PEG ratios. Still, it is important to dig deeper in the financials to understand the capital structure and other key operating indicators.
Be sure to read the other value screens in this series. They are accessible from links on the right at the beginning of this post.
| Symbol | Company Name | Market Cap | P/E Last Year Actual | Price/Book | PEG |
|---|---|---|---|---|---|
| AFOP | ALLIANCE FIBER OPTIC PRODUCTS INC | $70.6M | 10.7 | 1.13 | 0.44 |
| AOSL | ALPHA AND OMEGA SEMICONDUCTOR LTD | $187.7M | 5 | 0.72 | 0.11 |
| BBOX | BLACK BOX CORP | $509.4M | 8.8 | 0.66 | 0.91 |
| BOFI | BOFI HOLDING INC | $182.3M | 8.6 | 1.1 | 0.49 |
| CAP | CAI INTERNATIONAL INC | $302.5M | 11 | 1.39 | 0.63 |
| MOC | COMMAND SECURITY CORP | $14.8M | 9.1 | 0.76 | 0.34 |
| COT | COTT CORP | $618.1M | 9.7 | 1.08 | 0.94 |
| DMND | DIAMOND FOODS INC | $626.7M | 11.4 | 1.38 | 0.52 |
| DGIT | DIGITAL GENERATION INC | $329.9M | 7.2 | 0.66 | 0.27 |
| DM | DOLAN CO (THE) | $272.7M | 8.3 | 0.93 | 0.52 |
| EEI | ECOLOGY AND ENVIRONMENT INC. | $67.9M | 9.7 | 1.33 | 0.76 |
| EFC | ELLINGTON FINANCIAL LLC | $282.8M | 5.6 | 0.75 | 0.1 |
| ECPG | ENCORE CAPITAL GROUP INC | $527.5M | 10.8 | 1.49 | 0.4 |
| FISI | FINANCIAL INSTITUTIONS INC | $231.6M | 10.5 | 1.04 | 0.84 |
| FRF | FORTEGRA FINANCIAL CORP | $137.2M | 7.1 | 1.05 | 0.33 |
| GIII | G III APPAREL GROUP LTD | $498.9M | 8.6 | 1.42 | 0.4 |
| GTN | GRAY TELEVISION INC. | $87.9M | 10.8 | 0.78 | 0.04 |
| HCKT | HACKETT GROUP INC (THE) | $153.5M | 14.1 | 1.26 | 0.63 |
| IEC | IEC ELECTRONICS CORP | $49.1M | 8.8 | 1.46 | 0.25 |
| ISSI | INTEGRATED SILICON SOLUTION INC | $255.6M | 8.1 | 1.09 | 0.25 |
| FSTR | L.B. FOSTER COMPANY | $291.7M | 14.6 | 1.1 | 0.63 |
| LGL | LGL GROUP INC (THE) | $18.4M | 1.7 | 0.71 | 0.79 |
| MTRN | MATERION CORP | $508.3M | 10.6 | 1.19 | 0.97 |
| MTRX | MATRIX SERVICE CO | $247.6M | 13.4 | 1.25 | 0.42 |
| MIG | MEADOWBROOK INSURANCE GROUP INC | $539.1M | 9.9 | 0.93 | 0.48 |
| BKR | MICHAEL BAKER CORP | $181.6M | 11.6 | 0.84 | 0.32 |
| MNRK | MONARCH FINANCIAL HOLDINGS INC | $46.2M | 10.4 | 0.65 | 0.71 |
| MPAA | MOTORCAR PARTS OF AMERICA INC | $92.0M | 6.8 | 0.77 | 0.12 |
| NEI | NETWORK ENGINES INC | $42.8M | 5 | 0.47 | 0.2 |
| IQNT | NEUTRAL TANDEM INC | $336.1M | 11 | 1.19 | 0.89 |
| OMN | OMNOVA SOLUTIONS INC. | $211.6M | 5.2 | 1.44 | 0.31 |
| OPLK | OPLINK COMMUNICATIONS INC | $319.9M | 9.9 | 1.15 | 0.39 |
| PKBK | PARKE BANCORP INC | $25.9M | 4.1 | 0.43 | 0.48 |
| PCCC | PC CONNECTION INC | $301.6M | 13.3 | 1.09 | 0.76 |
| MALL | PC MALL INC | $71.8M | 9.8 | 0.65 | 0.18 |
| RICK | RICK’S CABARET INTERNATIONAL INC | $85.2M | 8.7 | 1.12 | 0.46 |
| STBZ | STATE BANK FINANCIAL CORP | $473.9M | 10.8 | 1.22 | 0.56 |
| SYX | SYSTEMAX INC. | $609.9M | 14 | 1.39 | 0.67 |
| TGB | TASEKO MINES LTD | $511.8M | 7.2 | 1.07 | 0.16 |
| GTS | TRIPLE-S MANAGEMENT CORP | $588.9M | 9.9 | 0.87 | 0.4 |
| TPC | TUTOR PERINI CORP | $610.5M | 6.1 | 0.44 | 0.3 |
| UFI | UNIFI INC. | $144.2M | 5.6 | 0.51 | 0.06 |
| UEIC | UNIVERSAL ELECTRONICS INC | $248.5M | 13.4 | 1.1 | 0.85 |
| VIAS | VIASYSTEMS GROUP INC | $342.4M | 11.3 | 1.26 | 0.22 |
| VOXX | VOXX INTERNATIONAL CORP | $198.0M | 8 | 0.49 | 0.38 |
| VSEC | VSE CORP | $121.5M | 5 | 0.88 | 0.24 |
| WRES | WARREN RESOURCES INC | $223.9M | 10.1 | 1.3 | 0.52 |
| WBCO | WASHINGTON BANKING CO | $183.4M | 7.8 | 1.1 | 0.92 |
| WSTL | WESTELL TECHNOLOGIES INC | $153.6M | 9.8 | 0.87 | 0.56 |
| XRTX | XYRATEX LTD | $404.7M | 3.3 | 1.13 | 0.39 |
The Value Stock Guide Premium Portfolio owns a few names in this list. It is expected that some of the small cap value stocks in this list will pass my further filters and make it to the VSG Watch List (available to our free email subscribers). A smaller number of these small cap value stocks might be attractive enough to be rated as a Buy for our members. Deeper due diligence report is published for all the Buy recommended stocks inside the member’s area, so if you are interested you may want to sign up.
What you should keep in mind when investing in small cap value stocks
Undervalued small cap stocks are typically distressed for a reason and require much deeper due diligence than most investors are prepared to do. When investing in small cap value stocks, also bear in mind that many of these stocks can be less liquid so patience is required. It can be a volatile market in small caps so you should always follow your asset allocation plan.
This post is included in the Self Directed Investing for Retirement Carnival
An interesting list, thank you!
Thanks Stefan!