5 Top Small Cap Stocks to Buy Now
The market’s rebound after a rough start to February has proven that this bull market still has some legs. But I must warn you that not all stocks
are set to share in the profits. The bearish analysts like to hold up the trouble for a few big-name blue chips as a sign that market is doomed —
but don’t believe it. These naysayers who focus on the short-lived dips or handful of problem companies forget this is a market of stocks and not
just a stock market. The fact is that there are a lot of smaller companies that are thriving right now even if the 30 components of the Dow are struggling.
To help you find some gems that are outside of the major indexes, here are my Top 5 Small Cap Stocks.
Top Small Cap Stock #1 – Credit Acceptance Corp. (CACC)
Credit Acceptance Corp. (CACC) works with more than 3,000
independent and franchised automobile dealers in the U.S. and provides capital for auto loans to people with substandard credit and originates more
than 1.7 million loans per year. As consumer confidence improves and pent up demand for automobiles is resulting in strong sales, CACC is a great
way for us to cash in on this trend.
In a sign that the capital markets are functioning again, Credit Acceptance recently completed $110.5 million in asset-backed secured financing,
so it is obvious that it is possible again to bundle and sell auto loans. The stock remains a great near-term buy.
Top Small Cap Stock #2 – Priceline.com (PCLN)
Priceline.com (PCLN) has won over consumers by allowing buyers
to name their own price for everything from airline tickets to rental cars to cruises. Priceline.com keeps the difference between the price paid by
the individual and what Priceline.com paid for the ticket or hotel room.
In mid-February, PCLN said that its quarterly profit more than doubled with strong earnings of $78.5 million, and sales jumped by a whopping 33%.
As a result, shares skyrocketed 9% the following day alone. This is the type of explosive performance you can expect from this breakout small cap
stock in the months ahead.
Top Small Cap Stock #3 – SourceFire (FIRE)
SourceFire (FIRE) develops digital security and information
management software for the government and private industry. Its innovative programming team is constantly upgrading features, staying one step ahead
of the latest digital threats. Its customers have included PricewaterhouseCoopers, SAIC and Ernst & Young.
In its latest earnings report at the end of February, SourceFire posted earnings of 23 cents per share. That was significantly above Wall
Street’s target of 19 cents. Aditionally, FIRE grew
its quarterly revenue from $25.7 million in fourth-quarter 2008 to $35.3 million in fourth-quarter 2009 — a 37% jump. Thanks to these tremendous
numbers, 2009 marked the first full-year profit in the history of the company. That’s a sign that this up-and-coming small cap is here to stay.
Top Small Cap Stock #4 – China Green Agriculture (CGA)
China Green Agriculture (CGA) is an innovative agricultural
company helps farmers grow more crops without hurting the environment. The “green” fertilizer market in China is booming right now due to the fact
that the country’s population continues to grow alongside its economy. This means that more arable land is needed in the coming years to ensure that
there’s enough food available to sustain China’s growing middle class. CGA is a small foreign company without much of an analyst following, but you
don’t need estimates to see how great this pick is.
China Green posted strong earnings in February, including a sales increase of 60% year-over-year and a jump of 78% in net income. Gross margins
also improved to 61% from 59% last year. This drove shares up by double-digits in just a few trading days after earnings, and CGA should continue
its red-hot run in the weeks ahead.
Top Small Cap Stock # 5 – Hi-Tech Pharmacal (HITK)
Hi-Tech Pharmacal (HITK) is scheduled as one of the last companies
to post a quarterly report this earnings season. However, if its last quarterly report in December is any indication, this pick’s earnings are well
worth waiting for. In its last report, Hi-Tech’s earnings rose 566.7% to $7.4 million or 60 cents per share compared with $1.1 million or 9 cents
per share in the same quarter a year ago, while sales rose 62.9% in the same period.
This generic pharmaceutical company offers a wide range of innovative medications, treating everything from allergies to arthritis and should see
continued growth in the months ahead.How Do the Stocks in Your Portfolio Measure Up?
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