Cheap Small Cap Stocks On the Rise

Joel Anderson  |

Finding the right small cap stock is one of the most satisfying things an investor can do. Locating that perfect company that's on the rise and grabbing hold of it before it explodes isn't just a way to score a great return on investment, it's the sort of thing you can really gloat about. Casually mentioning at parties how, yes, I got in on that flashy tech company when it was still worth less than $1 billion. It's enough to make a person feel like the Oracle at Delphi.

Unfortunately, there's no really consistent rhyme or reason to locating those stocks that are poised to explode. However, one method might be to look at those companies that have shown consistent growth in sales and earnings over the last few years while still coming in as being relatively cheap. So here are five companies that offer attractive P/E ratios while also showing sales and earnings growth over 25 percent for the last half decade. What's more, with a PEG under 1, these companies are also attractively priced based on their projected growth. While historical data is not a reliable predictor of future performance and a low price can mean a lot of different things, these are cheap stocks that have been growing with strength and at least warrant a second look.

C&J Energy Services (CJES)

Market Cap: $883.67 million  P/E: 5.51   PEG: 0.28   Sales Growth Last Five Years: 92.4 percent   EPS Growth Last Five Years: 101.83 percent

C&J Energy is an energy company specializing in hydraulic fracturing and coiled tubing services. The company has been riding the fracking boom with huge growth over the last five years, but the stock remains at an attractively low price for its past numbers. C&J Energy also offers an operating margin north of 33 percent and a profit margin better than 20 percent. C&J also announced a week ago that it would be deploying a new  32,000 horsepower hydraulic fracturing fleet to two Texas markets in reaction to growing demand.

GT Advanced Technologies (GTAT)

Market Cap: $872.99 million  P/E: 5.98   PEG: 0.54   Sales Growth Last Five Years: 80.63 percent   EPS Growth Last Five Years: 51.89 percent

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GT Advanced Technologies is a solar company that makes polysilicon production technology and multicrystalline ingot growth systems and provides related photovoltaic manufacturing services. While solar can be a tough industry to read, and it's in the midst of a free fall that started last year, GT Advanced has an attractive price and some solid growth to build on. What's more, with a P/S just under 1 and a P/FCF just over 6, the company's clearly bringing in revenue.

Bridgepoint Education (BPI)

Market Cap: $1.12 billion  P/E: 7.15   PEG: 0.39   Sales Growth Last Five Years: 100.76 percent   EPS Growth Last Five Years: 45.79 percent

Bridgepoint is a postsecondary education company offering degree programs through its subsidiaries Ashford University and the University of the Rockies. The company offers 71 degree programs, 134 specializations, and 1,345 courses with over 77,000 students enrolled and 99 percent taking classes online. The company could be an attractive investment opportunity when one considers the above data as well as its gross margin of over 70 percent and operating margin just shy of 30 percent.

Amtrust Financial Services (AFSI)

Market Cap: $1.58 billion  P/E: 9.52   PEG: 0.81   Sales Growth Last Five Years: 28.54 percent   EPS Growth Last Five Years: 26.32 percent

Amtrust Financial is an insurance company primarily offering services in the specialty property and casualty segment. It's a multi-national company that has been growing with purpose over the last five years. Throw in a modest 1.37 percent dividend yield and Amtrust could be a stock to consider.

Oplink Communications (OPLK)

Market Cap: $323 million  P/E: 10.56   PEG: 0.41   Sales Growth Last Five Years: 29.38 percent   EPS Growth Last Five Years: 92.62 percent

Oplink is a semiconductor company that designs and manufactures optical networking components and subsystems that redirect light signals, monitor and protect wavelength performance, expand optical bandwidth, amplify optical signals, provide signal transmission and reception within an optical network, and ensure signal connectivity. With no real debt and a P/C ratio of 1.86, the company appears to be in a stable position for the future.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:


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