Smallcap shares tracked by Russell 2000 Index have rallied for seven straight quarters, the longest stretch ever, sending the valuations 26% above the levels of the 1990s rally, according to data compiled by Bloomberg. Matthew Peron, managing director of global equities at Northern Trust Corp. in Chicago notes that the rally in smallcap stocks reflects expansion of American economy faster than rest of the world. The benchmark gauge for smaller shares has risen 2.6% this quarter compared with 1% gain in the S&P 500. During the past one year, the smallcap shares index has returned over 24%.
During the last quarter, profits of the Russell 2000 companies improved 6.8% while S&P 500 companies registered a growth of 8.6%. Currently, the Russell 2000 index is trading 49 times its reported earnings compared to multiple of 39x during March 2000, while the S&P 500 has a price-earnings ratio of 17x, close to its average since 1937, as per data compiled by Bloomberg. China’s economic slowdown and political crises in Ukraine has fuelled the rally in American small-caps as investors played safe bets on stocks that are not reliant on global revenues. The average firm in the Russell 2000 gets 84% of its sales from the U.S., compared with 70% for the S&P 500, data compiled by Bloomberg show.
Ubika Research has shortlisted eleven attractive smallcap stocks from Russell Index 2000 which have recorded significant price gains year-to-date and during the past one year. Moreover, these stocks are likely to rally further since they are currently trading at relatively low forward Price-to-Earning (P/E) in comparison to the Russell 2000 Index and provide high return on equity with strong estimated EPS growth for 2014. We note that these stocks have recorded significant gains during the past month with three months daily average traded volume in excess of 100,000.
|
Company Name |
Ticker |
Exchange |
Sector |
Market Cap |
Last Price |
Average Volume |
Price Return |
Price Return |
Price Return |
EPS Growth |
EPS Growth |
Current PE Ratio |
1Yr- Forward PE ratio |
Return on equity |
|
Sonic Corp |
SONC |
NASDAQ |
Restaurants |
1.3 |
23.23 |
798,362 |
17.6% |
15.1% |
80.5% |
8.3% |
14.7% |
30.6 |
28.1 |
57.9% |
|
Swift Transportation Co |
SWFT |
NYSE |
Industrial |
3.5 |
25.01 |
2,284,250 |
2.8% |
12.6% |
73.1% |
11.0% |
15.2% |
26.8 |
17.6 |
49.4% |
|
Take-Two Interactive Software Inc |
TTWO |
NASDAQ |
Technology |
2.1 |
21.24 |
2,953,659 |
7.4% |
22.3% |
32.6% |
72.3% |
1,072.5% |
7.4 |
5.0 |
48.6% |
|
HFF Inc |
HF |
NYSE |
Financial |
1.2 |
33.12 |
216,929 |
4.6% |
31.4% |
83.5% |
16.0% |
22.4% |
24.4 |
19.9 |
31.2% |
|
Bank of the Ozarks Inc |
OZRK |
NASDAQ |
Financial |
2.5 |
67.14 |
215,379 |
10.4% |
18.6% |
51.1% |
9.0% |
18.4% |
28.2 |
23.7 |
15.4% |
|
Jack in the Box Inc |
JACK |
NASDAQ |
Restaurants |
2.5 |
59.90 |
454,080 |
3.9% |
19.8% |
73.2% |
23.2% |
28.5% |
26.7 |
25.6 |
14.3% |
|
Knight Transportation Inc |
KNX |
NYSE |
Industrial |
1.8 |
22.35 |
710,445 |
2.8% |
21.9% |
39.4% |
8.7% |
13.8% |
25.8 |
22.8 |
13.3% |
|
Matrix Service Co |
MTRX |
NASDAQ |
Energy |
0.9 |
34.18 |
244,435 |
7.9% |
39.9% |
124.9% |
39.4% |
45.9% |
28.2 |
25.7 |
12.8% |
|
Boston Private Financial Holdings Inc |
BPFH |
NASDAQ |
Financial |
1.1 |
14.06 |
451,482 |
11.7% |
11.4% |
41.3% |
9.4% |
42.1% |
20.7 |
17.1 |
9.9% |
|
Astec Industries Inc |
ASTE |
NASDAQ |
Industrial |
1.0 |
43.99 |
106,488 |
7.8% |
13.9% |
24.5% |
14.7% |
20.1% |
26.5 |
21.7 |
6.9% |
|
Ameris Bancorp |
ABCB |
NASDAQ |
Financial |
0.6 |
23.73 |
101,426 |
14.1% |
12.4% |
64.9% |
65.2% |
80.9% |
26.8 |
14.6 |
6.8% |
Source: Bloomberg;
Company Description:
Sonic Corp (NASDAQ: SONC)
Sonic Corp. franchises and operates a chain of drive-in restaurants. The company currently has Company-owned and franchised restaurants, principally in the south central and southeastern United States. Sonic’s restaurants offer made-to-order hamburgers and other sandwiches, as well as signature items.
Swift Transportation Co (NYSE: SWFT)
Swift Transportation Co. provides transportation and logistics services. The company offers dry van, dedicated, temperature controlled, flat bed, cross border, and intermodal transport services. Swift also provides customs brokerage services. Swift serves customers throughout the United States and Mexico.
Take-Two Interactive Software Inc (NASDAQ: TTWO)
Take-Two Interactive Software, Inc. develops markets, distributes, and publishes interactive entertainment software games and accessories. The company’s products are for console systems, handheld gaming systems and personal computers (including smartphones and tablets) and are delivered through physical retail, digital download, online and cloud streaming services.
HFF Inc (NYSE: HF)
HFF Inc. provides commercial real estate and capital markets services to the commercial real estate industry in the United States. The company provides capital markets services such as debt placement, investment sales, structured finance, private equity investment banking and advisory services, note sales and advisory services and commercial loan servicing.
Bank of the Ozarks Inc (NASDAQ: OZRK)
Bank of the Ozarks, Inc. is the holding company for the Bank of the Ozarks. The Bank provides a wide range of retail and commercial banking services to businesses, individuals and government agencies through the company’s banking offices located throughout Arkansas, Georgia, Texas, Florida, Alabama, North Carolina and South Carolina.
Jack in the Box Inc (NASDAQ: JACK)
Jack in the Box Inc. operates and franchises Jack In the Box fast-food restaurants primarily in the Western region of the United States. The company’s drive-thru restaurants offer hamburgers, specialty sandwiches, salads, Mexican food, finger foods, and side items.
Knight Transportation Inc (NYSE: KNX)
Knight Transportation, Inc. is a short-to-medium haul, dry van truckload carrier. The company transports general commodities, including consumer goods, packaged foodstuffs, paper products, beverage containers, and imported and exported commodities. The company operates throughout the United States.
Matrix Service Co (NASDAQ: MTRX)
Matrix Service Company provides specialized on-site maintenance and construction services for petroleum refining and storage facilities, as well as water storage facilities for the private industry sector. The company’s services include the maintenance, inspection, design, repair, and construction of aboveground storage tanks.
Boston Private Financial Holdings Inc (NASDAQ: BPFH)
Boston Private Financial Holdings, Inc. is a financial holding company. The company’s subsidiaries offer a variety of banking, commercial, and residential lending services, as well as trust and investment management services to its domestic and international clients.
Astec Industries Inc (NASDAQ: ASTE)
Astec Industries, Inc. designs, engineers, manufactures, markets, and finances equipment and components used primarily in road building and related construction activities. The company’s products are used in each phase of road building, from quarrying and crushing the aggregate to application of the road surface.
Ameris Bancorp (NASDAQ: ABCB)
Ameris Bancorp is a multi-bank holding company. The Banks provide a broad range of retail and commercial banking services to its customers, including checking and savings deposits, commercial and consumer loans, trust services, discount brokerage services, and electronic funds transfer services. Ameris Bancorp operates in Georgia, Florida and Alabama.
