Small Caps - PPO ANV MERC WNR HOC OMG CPKI CBOU RNWK KRG

Last week, I covered what I thought to be some of the best small-cap stocks and some of the worst small caps on the earnings docket. Let’s see how I did, and cover which stocks still represent good investments and which of these small caps you should avoid.

Polypore International Inc. (PPO)

My Prediction: Big Sales Increase
Result: 28% Sales Increase

When Polypore International Inc. (NYSE: PPO) reported last week, it blew expectations out of the water. The company posted a 28% sales increase, meeting my prediction of strong sales growth, and grew earnings by 47% year over year. The filtration products maker logged earnings of $25.7 million, or 55 cents per share, beating analysts’ estimates of 40 cents per share by 38%! The stock is being rewarded for these strong results and has risen 25% since the day of the announcement.

Allied Nevada Gold Corp. (ANV)

My Prediction: Earnings Growth
Result: Earnings Miss

Allied Nevada Gold Corp. (AMEX: ANV) missed estimates in its most recent report, recording earnings of $0 per share while analysts had been predicting earnings of 6 cents per share, but full-year expectations for the company’s profit are still high. Analysts expect a year-over-year earnings increase of 85%. ANV could very well meet or exceed these expectations as the company has terrific profit margins and is investing heavily in new exploration activities. Long-term, this is still a great play.

Mercer International Inc. (MERC)

My Prediction: Earnings Growth
Result: 39% Earnings Surprise

Mercer International Inc. (NASDAQ: MERC), a paper-pulp producer, posted strong results as higher pulp prices and rising energy sales (the company uses some of its leftover pulp to generate electricity) lifted its bottom line. Prices per ton of pulp rose by $30 in Europe and North America, and by $50 in China. Thanks to these strong increases, the company posted earnings of $43.1 million, or 75 cents per share, beating the consensus estimate of 54 cents per share by 39%. The stock has been responding well to the results, gaining nearly 10% since the announcement was made last week.

Western Refining Inc. (WNR)

My Prediction: Earnings Surprise
Result: Earnings Miss

Oil refiner and marketer, Western Refining Inc. (NYSE: WNR), reported earnings that missed estimates, but the company greatly improved on its year-ago result (which is why the stock is up 15% since it announced.) The company reported earnings on $14.2 million, or 17 cents per share, missing the consensus estimate of 30 cents per share. A year ago, WNR recorded a loss of $30.7 million, or 35 cents per share, so the company has obviously improved profitability. Margins rose 147% year-over-year, and the company is benefiting from continued strength in the industry. Buying pressure behind this stock is still strong, and expectations for the current quarter are even better than for the first. Analysts say the company will report earnings of 82 cents per share in the second quarter.

Holly Corp. (HOC)

My Prediction: Earnings Surprise
Result: 11% Earnings Surprise

Holly Corp. (NYSE: HOC) is another oil company that popped up on my screen this earnings season and it shows you the huge potential of oil and gas plays because of the current high-oil-price environment. The company recorded a first-quarter profit of $84.7 million, or $1.58 per share, up from its first-quarter loss of $28.1 million, or 53 cents per share, in 2010, and ahead of consensus expectations by 11%. Sales increased 24% year over year due to strong demand for refined products. The results nearly broke a record for the company, and they’re setting HOC up for another spectacular quarter in the second part of the year. This small-cap stock has gained 14% since the announcement.

OM Group Inc. (OMG)

My Prediction: Earnings Miss
Result: Earnings Surprise

OM Group Inc. (NYSE: OMG) experienced an unexpected uptick in demand from industrial manufacturers, and this boosted the company’s bottom line in the first quarter. I had been expecting the company to miss earnings forecasts, but the company actually beat them handily, reporting earnings of $1 per share versus the expectation of 62 cents per share. Despite the strong earnings result, I still do not have enough confidence in the stock to invest in it at this time. Buying pressure is still not strong enough, and this could lead to some excess volatility. However, if the company continues to post such strong results and investors begin to move in to the stock, I may raise my rating on OMG.

California Pizza Kitchen Inc. (CPKI)

My Prediction: Slow Earnings Growth
Result: Earnings Decline

I predicted that California Pizza Kitchen Inc. (NASDAQ: CPKI) would disappoint in its first-quarter earnings announcement, and I was right on the money. CPKI reported net income of $2.1 million, or 9 cents per share, a 15% year-over-year decrease. While beating analysts’ estimates, the result is still unnerving as I never like to see shrinking profits. Sales also fell, by 0.5% to $156 million. The company has been investing in changes to its business model, but to date, this effort has failed to bear enough fruit to draw investors into the stock.

Caribou Coffee Co. (CBOU)

My Prediction: Earnings Decline
Result: Earnings Surprise

Coffee shop company, Caribou Coffee Co. (NASDAQ: CBOU), posted unexpectedly strong results last week. The company reported first-quarter earnings of $1.6 million, or 8 cents per share, beating the consensus expectation of 3 cents per share. Sales also increased by 8% year over year to $72.3 million. I had predicted a sales miss, and while I am encouraged by the results, I still wouldn’t invest in the stock at this time. It currently received a “C” in Portfolio Grader, which makes it a “hold,” and analysts are still predicting the company will post negative full-year earnings growth.

RealNetworks Inc. (RNWK)

My Prediction: Slow Sales Growth
Result: Negative Sales Growth

RealNetworks Inc. (NASDAQ: RNWK) posted weak results for the first quarter last week. The company reported a net loss of $12.3 million, or 9 cents per share, in the three-month period, down from its first-quarter profit of $3.2 million, or 5 cents per share, in 2010. Sales also decreased year over year, from $128.6 million to $87.3 million. Expectations going forward are for more losses and, as a result, I would highly recommend that you stay away from this stock at this time.

Kite Realty Group Trust (KRG)