Best Small Cap Stocks to Watch in 2015

In terms of valuations, these small cap stocks are cheap. Some of these are cheap for a reason, specifically the companies in the oil and gas sector. My global oil demand/supply model indicates that we will see the oil prices rise again in the 2nd half of this year. At the same time, we have not yet seen large scale well idling and debt defaults for the highly leveraged operators operating in the shale formations, so there is a possibility for the prices to become better yet. With this in mind, I would like to throw up some oil names to keep in the watch list, along with some other small cap names that may be attractive today based on a combination of earnings yield, price to book multiple and historical earnings growth.

Please do not buy or sell any stock without conducting your own due diligence. If any of these stocks become a recommendation, I will post my analysis for the members. You should take this list as a starting point for further research.

Market capitalization range for this screen is $30 million – $1 billion.

Oil & Gas Stocks

Company Name Symbol Market Capitalization Industry P/E (Last Year Actual) Price/Book EPS Growth (5 Year Historical)
GRAN TIERRA ENERGY INC GTE $957.9M Independent Oil & Gas 7.9 0.64 22.42%
TRANSGLOBE ENERGY CORP TGA $282.2M Independent Oil & Gas 4.5 0.51 11.33%
VAALCO ENERGY INC EGY $265.0M Independent Oil & Gas 6.1 0.95 8.16%
NORTHERN OIL AND GAS INC NOG $340.8M Oil & Gas Drilling and Exploration 5.3 0.51 64.76%
APPROACH RESOURCES INC AREX $222.3M Oil & Gas Drilling and Exploration 12.2 0.3 10.56%
GEOSPACE TECHNOLOGIES CORP GEOS $327.1M Oil & Gas Equipment and Services 9.4 0.99 80.91%

Generally you would think that the EPS Growth data may not be very meaningful given the perception that the oil price shock has made the situation completely different than what it was in the past. Agreed to some extent, but when you are investing in cyclical industries and trying to pick up some good names near the bottom, this data can come in useful to distinguish a well run company from the rest. There is more that goes into making this judgment that requires a good industry knowledge.

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Rest of the Market

Company Name Symbol Market Capitalization Industry P/E (Last Year Actual) Price/Book EPS Growth (5 Year Historical)
MEDALLION FINANCIAL CORP. TAXI $252.1M Credit Services 8.7 0.91 6.17%
IRIDIUM COMMUNICATIONS INC IRDM $888.7M Diversified Communication Services 13.9 0.73 77.76%
TITAN INTERNATIONAL INC TWI $551.1M Farm & Construction Machinery 14 0.86 10.99%
ROCKY BRANDS INC RCKY $103.2M Footwear 13.5 0.77 36.08%
AEGION CORP AEGN $656.8M Heavy Construction 14.7 0.98 8.61%
LIQUIDITY SERVICES INC LQDT $237.3M Liquidity Auctions 8 0.74 35.80%
KIMBALL INTERNATIONAL INC KBAL $358.3M Printed Circuit Boards 11.8 0.81 13.33%
OMEGA PROTEIN CORP OME $228.1M Processed & Packaged Goods 6.2 0.86 16.35%
PARKE BANCORP INC PKBK $69.8M Regional Banks 7.9 0.86 14.64%
FIRST COMMUNITY BANCSHARES INC FCBC $302.0M Regional Banks 14.6 0.91 49.23%
OFG BANCORP OFG $722.9M Regional Banks 9.6 0.97 13.96%
BANK OF COMMERCE HOLDINGS BOCH $79.4M Regional Banks 11.4 0.97 15.77%
TERRITORIAL BANCORP INC TBNK $214.0M Regional Banks 14.6 0.92 18.79%

A list of 19 small cap stocks like this should yield 3-5 ideas to keep a closer watch on and possibly 1 or 2 stocks with great investment potential. Let me know in the comments if any of these stocks look good to you. Keep in mind that I look for good values and most of the time this means distressed stock price so it is important to take a deeper look into the business to determine if the reasons justify the valuation.


    • says

      That would entirely depend on your investment horizon and the price you pay. The one o&g stock we purchased from this list is slightly profitable for us as of now. We also play a long game and do not measure our investment horizon in weeks or months. Finally, I do not believe in guesses or predictions and the investment thesis is based upon data.

  1. says

    A lot of banks on the second list.. low PE, PB and high EPS growth are the first filter so can for short term swing trades.

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