The acceleration of bull-market conditions in 2013 has sent benchmark stock indexes to new heights on numerous occasions throughout the year, and has done so despite no small amount of uncertainty with regard to the outlook for domestic and global economic conditions.
Even from the outset, however, analysts and commentators have been concerned about the relatively thin trading volume on which share prices have scored such dramatic advances. Fears of a correction have furthermore been exacerbated by the back-and-forth over the Fed’s plans concerning its $85 billion monthly in bond and asset purchases.
Investors, and especially stock-pickers, have likely found their work cut out for them when attempting to extrapolate more realistic valuations out of the given fundamental data. Thankfully, at least for those who fancy small-caps or who have turned to the small-cap space in their search for more reliable returns, Equities.com has been building out its Small-Cap Stars series.
In order to assist investors in their quest to tap the high-growth opportunities that are often to be found among smaller companies, Equities.com’s own analysts devised a sector-specific stock screener based on the most important fundamental data.
A full run-down of the methodology can be found here, but the value of this important investment tool can be assessed by taking a look at the numbers. The average price-to-earnings ratio of the services sector, for instance, is currently at 28. According to the Small-Cap Stars screener, the following four companies, all 5-star candidates, have returned at a rate of over 75 percent on a year-to-date basis while maintaining P/E ratios that are well below both sector and industry averages, an indication that they have been overlooked and/or undervalued by the market.
PC Connection (PCCC)
Industry: Catalog & Mail Order Houses
Market-Cap: $532.80 million
Price: $20.52
P/E Ratio: 15.54
Industry Average P/E Ratio: 66
Year-to-Date Return: +77 percent
Air Transport Services Group (ATSG)
Industry: Air Delivery & Freight Services
Market-Cap: $459.89 million
Price: $7.11
P/E Ratio: 13.05
Industry Average P/E Ratio: 38
Year-to-Date Return: +79 percent
Republic Airways Holdings Inc. (RJET)
Industry: Regional Airlines
Market-Cap: $539.72 million
Price: $10.32
P/E Ratio: 8.92
Industry Average P/E Ratio: 43.30
Year-to-Date Return: +93.10 percent
TravelCenters of America LLC (TA)
Industry: Specialty Retail
Market-Cap: $277.44 million
Price: $10.16
P/E Ratio: 14.30
Industry Average P/E Ratio: 21.80
Year-to-Date Return: +113 percent
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