5 Small-Cap Stocks to Buy

These little companies should deliver big earnings surprises

   

5 Small-Cap Stocks to Buy

Last week, I picked 10 large-cap stocks scheduled to report earnings in the week and told you which ones were going to beat estimates and which ones were going to miss. Well, the numbers are in, and by and large I was on the money. Most of my “good” stocks met or beat estimates, while a majority of the “bad” stocks missed estimates or issued weak guidance.

Now I want to turn to some small-cap stocks that are going to report earnings in the coming week that I think are going to outperform this earnings season and move higher.

5 Small-Cap Earnings Winners

Here are five small-cap stocks that I think are going to post spectacular earnings results this week:

Polypore International Inc. (PPO)

My Prediction: Big Sales Increase

Polypore International Inc. (NYSE: PPO) is a company that makes polymer-based membranes that are used in lithium-ion batteries. These are the batteries you find in such popular electronic devices as Apple’s (NASDAQ: AAPL) iPad table computer. It has even been rumored that Polypore is the supplier of these batteries for Apple, so obviously this company has a huge and rapidly growing customer base that is going to help it boost its profits in the quarters to company. For the first quarter, the company is expected to post earnings of 40 cents per share and increase sales by 13%. The company has a strong history of earnings surprises, so don’t be shocked if this company beats to the upside when it announces after the close today.

Allied Nevada Gold Corp (ANV)

My Prediction: Earnings Growth

Allied Nevada Gold Corp. (AMEX: ANV) is a gold mining company with a unique cost structure that allows it to capitalize on the rallying price of gold. The costs of operating the company’s sole mine are relatively low compared with other mines in the industry, and this helps boost ANV’s profits. The stock has been rallying over the past few months, and investors are expecting strong results when this company reports on Thursday.

Mercer International Inc. (MERC)

My Prediction: Earnings Growth

Mercer International Inc. (NASDAQ: MERC) produces wood pulp from both virgin wood and recycled products. Mercer is unlike any other paper company I’ve seen as it also has a rapidly evolving renewable energy division. In one of its mills in Canada, it converts the wood that is left over after the pulp production process into “black liquor” and burns it in a high-pressure boiler to generate power. The innovative paper company is expected to post nearly 300% earnings growth and solid sales growth of 22% when it reports on Thursday.

Western Refining Inc. (WNR)

My Prediction: Earnings Surprise

Western Refining Inc. (NYSE: WNR) is another oil stock that has jumped onto my screens in the first quarter of this year. The company is an independent crude oil refiner that operates in several western states in the United States. The company is expected to post a nearly 200% earnings increase, and analysts have been aggressively revising their earnings estimates higher ahead of this company’s announcement on Thursday. This is a great sign and normally precedes an earnings surprise.

Holly Corp. (HOC)

My Prediction: Earnings Surprise

Holly Corp. (NYSE: HOC) is another small-cap oil and gas company. As I’ve said, chemicals and oil and gas companies are rising to the top this earnings season as they reap the benefits of higher commodity prices. Holly refines fuels throughout the western United States and owns a 75% stake in a pipeline project running from Salt Lake City to Las Vegas. The stock has contracted some ahead of earnings but should pop when management announces analyst-beating results on Thursday. Analysts have revised their earnings estimates from 38 cents per share three months ago to $1.43 per share now.


Article printed from InvestorPlace Media, http://investorplace.com/2011/05/small-cap-stocks-to-buy-ppo-anv-merc-wnr-hoc/.

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