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Small-Cap Stars: Services Stocks

By  +Follow October 15, 2013 2:53AM
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Over the past year, consumers and businesses in the US have been confronted with a number of substantial and fairly unique contingencies that have puts limitations on spending ability.

First came the expiration of the Bush-era tax cuts, which was followed quickly by sequestration, and then a government shutdown capped by the threat of the nation defaulting on its debt, all of which has taken place against the backdrop of the threat of reduced stimulus spending out of the Federal Reserve. All of these factors have taken a bite out of the ability of individual consumers, families and businesses to spend money on whatever it is they need.

These conditions have created an uncertain environment for all economic sectors, and have left investors looking for new and better equity opportunities. Companies operating in the services sector have been under pressure as their clients or prospective clients rethink their budgets with a greater emphasis on saving rather than spending. Needless to say, some have managed better than others.

Thankfully, Equities.com has just recently unveiled its Small-Cap Stars series. As a means of locating and scrutinizing some of the most promising investment opportunities in each sector of the economy, Equities.com’s very own analysts have compiled a list of small-caps based on the most relevant, sector-specific fundamentals.

Our research analysts determined the following set of benchmarks for the most compelling small–cap companies in the consumer services sector:

Firm Value:  This barometer gauges the size and long-term health of a business.

Pre-Tax Operating Margins: Pre-tax operating income is one of the best barometers by which to assess the basic health of a business. A high margin is consistent with the theory that companies will perform better with extra pricing control.

Dividends: This metric is based on whether a company actually issues a dividend, as opposed to how much the dividend was. Dividends are counter-intuitive to companies in growth mode.

Market Debt/Equity: Companies obtaining capital through debt are likely healthier than companies raising capital through equity offerings because of the significantly more stringent requirements to access credit from banks.

Institutional Holdings:  Significant institutional ownership suggests a company’s potential is validated by major asset management firms, or the “smart money.”

A brief glance at the many companies that match up to these criteria should be sufficient to justify the worth of the methodology by which they were selected:

Phoenix New Media Limited (FENG) – The $888 million Chinese company is an internet and television content provider with that is very much at home in the all-important mobile segment. Its operations cover all types of content from news, to entertainment, to blogging, with operations limited for the time being to its home country. Founded in 2007, the shares for FENG are currently trading above $11 each, having gained 220 percent on the year.

Multimedia Games Inc. (MGAM) – The $945 million company designs and sells gaming machines primarily to casinos, including those located on Indian reservations in the US where restrictions on gambling are not as severe. The company is selling shares for over $32 each, having doubled in value so far this year on an overall advance of 122 percent.

Cumulus Media Inc. (CMLS) – The $977 million company is the owner and operator of commercial radio station clusters throughout the US. With over 500 stations in over 100 markets, the company makes the bulk of its revenues from selling advertising at the local, regional and national levels. Shares have more than doubled in value on a year-to-date basis (a gain of 107 percent), to the current price of $5.68.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Results for CMLS
Stockaholics
1 Sep 14 20:18:56
$IWEB closed up 100% today, on more than 290 MILLION shares traded! Huge News: http://t.co/ucQcnpafDY $LFL $BTU $CMLS
Stockaholics
1 Sep 14 15:52:07
$IWEB closed up 100% today, on more than 290 MILLION shares traded! Huge News: http://t.co/ucQcnpafDY $LFL $BTU $CMLS
WKRB News
1 Sep 14 00:33:05
Cumulus Media Short Interest Up 12.6% in August $CMLS http://t.co/UAyPF33IB2
Financial Headlines
1 Sep 14 00:11:20
$CMLS: Cumulus Media, Inc. (CMLS) Spikes Higher; CEO Buys 25K Shares http://t.co/NVarKbLIXq http://t.co/0BJy9rEWHt
US Banking News
1 Sep 14 00:10:29
Cumulus Media Short Interest Up 12.6% in August $CMLS http://t.co/6GVMuOeKJW
InterCooler
31 Aug 14 23:50:08
Cumulus Media Short Interest Up 12.6% in August $CMLS http://t.co/1L7KBB1Qtq
Daily Contracts
29 Aug 14 14:31:00
Real-Time feed of company contracts, original agreements and executive updates from Cumulus Media $CMLS http://t.co/URFSzkDotZ
Stockaholics
29 Aug 14 12:09:45
RSII shot up over 100% today! Major Update: http://t.co/GMnQioznZp $LFL $BTU $CMLS
monestsignalen
29 Aug 14 02:33:03
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28 Aug 14 16:28:21
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Market Compass
28 Aug 14 13:11:20
$CMLS: Cumulus Media, Inc. (CMLS) Spikes Higher; CEO Buys 25K Shares http://t.co/boDyTckpbI http://t.co/05AFZg6ueQ
Stockaholics
28 Aug 14 13:03:02
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28 Aug 14 12:46:08
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Stockaholics
27 Aug 14 20:16:26
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GoldenHounds
27 Aug 14 11:43:12
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Trader News Daily
27 Aug 14 11:30:37
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Stockaholics
27 Aug 14 00:47:49
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Stock News Headlines
26 Aug 14 13:11:22
$CMLS: Cumulus to stop distributing ABC News Radio at the end of 2014 http://t.co/jieXAedfcU http://t.co/qE94SJesvR
Business News Watch
26 Aug 14 12:11:23
$CMLS: Cumulus Media Q2 Profit Drops - Quick Facts http://t.co/fMyTzlVPQB http://t.co/553kReq05p
Business News Watch
26 Aug 14 11:11:21
$CMLS: Cumulus to stop distributing ABC News Radio at the end of 2014 http://t.co/bEBAi67CmJ http://t.co/Ocz6GUpWL4
Daily Contracts
26 Aug 14 10:41:01
Real-Time feed of company contracts, original agreements and executive updates from Cumulus Media $CMLS http://t.co/URFSzkDotZ
Stockaholics
26 Aug 14 01:18:12
$MCET closed up 57% yesterday. Platinum Members once saw 235% gains on it, in 1 week: https://t.co/9OxPSiatev $LFL $BTU $CMLS
Daily Contracts
25 Aug 14 10:12:00
Real-Time feed of company contracts, original agreements and executive updates from Cumulus Media $CMLS http://t.co/URFSzkDotZ
				
				
By  +Follow October 15, 2013 2:53AM
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