Introduction
Welcome to the Growth at a Reasonable Price screen for November. Generally growth at a reasonable price is not an investment criteria for value investors, but these screens turn up stocks that can satisfy a stricter value investment filters.
That being said, small cap stocks are more likely to exhibit both value and growth attributes due to less following on the wall street.
Screen Details
This screen looks for small cap stocks between $30 million and $2 Billion in market capitalization with attractive growth characteristics. We require a reasonable PEG ratio to ensure attractive valuation. Some of the other parameters include:
- EPS 5 Year Avg Growth > 15%
- EPS Next Year Estimated Change > 15%
- Earnings Yield > 5%
- Operating Income 5 Year Avg Growth > 15%
- PEG Ratio, forward < 1.2
- PEG Ratio, trailing < 1.2
- Sales 5 Year Avg Growth > 8%
The Screen Results
Stock | Company | EPS growth, 5 YR Avg | Earnings Yield | peg ratio, forward | sales growth, 5 yr avg |
|---|---|---|---|---|---|
BSTC | BioSpecifics Technologies | 36.2% | 6.1% | 0.6 | 21.1% |
CCS | Century Communities | 24.5% | 9.2% | 0.8 | 52.7% |
CNR | Cornerstone Building | 16.3% | 14.1% | 0.3 | 22.2% |
CPE | Callon Petroleum | 24.5% | 25.0% | 0.2 | 35.7% |
HOFT | Hooker Furniture | 21.6% | 11.0% | 0.5 | 22.7% |
LGIH | LGI Homes | 34.2% | 7.3% | 0.7 | 35.5% |
MED | Medifast | 23.7% | 5.4% | 0.7 | 19.0% |
TTMI | TTM Technologies | 35.5% | 5.1% | 1.1 | 15.9% |
Notes and Observations
- BSTC: Growth numbers look great and my caution with bio-pharmaceutical companies notwithstanding, this may be worth checking out as the revenue and earnings have been a steady climb.
- CCS: A nicely valued stock that would depend on your estimate of the residential housing market strength. There is no dividend and the short interest is high at about 15%
- CNR: Mergers and acquisitions are driving this building products company's revenue growth this year and in the future. Keep an eye on the integration expenses.
- CPE: The future earnings are dependent on the oil prices and it is wise to be a little circumspect right now. Heavy short interest.
- HOFT: This stock is already on my further due diligence list from other screens.
- LGIH: Similar to CCS, the stock is about 25% shorted. I am priming ourselves for a possible recession with the housing market to suffer as well. I will wait on these.
- MED: Weight loss company. The stock is shorted heavily, but the fundamentals look solid. I want to investigate further and have added this to further review list.
- TTMI: Looks to be fairly valued.
Ending Note
Many of these companies are cheap now because of a sputtering growth in revenues that may very well be temporary. The 5 year future growth estimates continue to be solid, but whether this will be realized is anyone's guess. MED and HOFT offers compelling valuations and should be pursued further.
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