24 Ideas: Best Investments for 2014 in Small Cap Stocks

The following is a recent screen I ran to find new small cap investment ideas in 2014. I am still reviewing these stocks in greater detail but as of now, a couple have already made it to my watch list.

Company Name Symbol Industry Market Cap P/E Price/Book EPS Growth (5 Year Historical)
ALASKA COMMUNICATIONS SYSTEMS GROUP INC ALSK Telecom Services $91.8M 0.7 0.71 63.53%
IMPERIAL HOLDINGS INC IFT Life Insurance $122.6M 2.4 0.63 49.63%
SECURITY NATIONAL FINANCIAL CORP SNFCA Credit Services $51.2M 3.5 0.54 47.66%
M B T FINANCIAL CORP MBTF Regional Banks $105.5M 3.5 0.92 69.76%
OLD SECOND BANCORP INC OSBC Regional Banks $64.6M 0.8 0.87 44.67%
FEDERAL AGRICULTURAL MORTGAGE CORP. AGM Credit Services $364.3M 5.2 1.32 56.79%
FIRST SAVINGS FINANCIAL GROUP INC AND FIRST SAVING FSFG Regional Banks $53.6M 11.7 0.63 95.32%
ELLINGTON FINANCIAL LLC EFC Mortgage Investment $617.2M 7.4 0.99 85.33%
FIRST FINANCIAL NORTHWEST INC FFNW Regional Banks $170.4M 7 0.92 46.21%
EMC INSURANCE GROUP INC EMCI P&C Insurance $444.1M 10.3 0.97 91.29%
VOXX INTERNATIONAL CORP VOXX Audio Electronics $321.0M 9.6 0.62 26.78%
UNITED SECURITY BANCSHARES INC USBI Regional Banks $47.7M 12.4 0.69 43.10%
HMN FINANCIAL INC HMNF Saving & Loan $54.0M 2.1 0.9 15.48%
SALISBURY BANCORP INC SAL Regional Banks $46.0M 11.8 0.81 28.36%
GSV CAPITAL CORP GSVC Venture Funding $231.5M 6.6 0.8 13.86%
TITAN MACHINERY INC TITN Farm Equipment Retail $333.8M 13.6 0.82 34.76%
NEW CENTURY BANCORP INC. NCBC Regional Banks $44.2M 12.6 0.79 22.79%
ROCKY BRANDS INC RCKY Footwear $103.0M 14.5 0.78 36.08%
SOUND FINANCIAL BANCORP INC SFBC Regional Banks $43.0M 11.4 0.92 26.18%
HOME FEDERAL BANCORP/LA HFBL Savings & Loan $39.9M 14.6 0.97 49.47%
ATLAS AIR WORLDWIDE HOLDINGS INC. AAWW Air Services $797.5M 8.7 0.61 4.27%
FIRST DEFIANCE FINANCIAL CORP. FDEF Savings & Loan $261.4M 12.4 0.97 19.20%
GLADSTONE CAPITAL CORP GLAD Business Development Company $204.8M 6 0.97 7.21%
TERRITORIAL BANCORP INC TBNK Regional Banks $221.4M 14.8 0.98 18.79%

 

The screen limits the stocks between $30 million and $920 million market capitalization.

As is normally the case with smaller stocks, there is usually a story behind any abnormally low valuation indicator. Taking the time to understand the story puts you at an advantage as most investors do not do this, and many of these stocks are not followed by professional analysts. It is also a little interesting to see this list continuing to be dominated by financials, so many years after the bottom fell out.

VOXX is a former Value Stock Guide Portfolio stock.

Comments

  1. Andrew says

    I just thought that financials always had low price-to-book ratios compared to other industries. Is that not the case?

    Thanks.

    • says

      Typically yes, due to preponderance of cash on the books. However, if the cash is being profitably deployed (earning above the risk free rate), you would expect the price to book to be higher than 1. Most financials are generally richly priced if at 2 times book value or higher and could be cheap under 1 times.

  2. Charlie says

    The EXCESS for 2014 YTD probably should total to 9.27% ?
    Thank you for such a great newsletter. I really appreciate it.
    It calms me down. I am getting more patient everyday. No reply
    is needed. Charlie Butts

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