A Stirring Performance From These Small-Caps

 | Aug 08, 2012 | 4:30 PM EDT
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Some of the best small-cap price performers, such as Lumber Liquidators (LL), Cirrus Logic (CRUS) and Ancestry.com (ACOM), have gotten some attention in the financial media. But those aren't the only smaller stocks that are showing good potential right now.

For instance, from the agricultural sector, Rentech Nitrogen Partners (RNF) -- which went public at $20 in November -- has been a clear leader. In recent trading Wednesday, it was up 8.2% for the week. This name has been bubbling to the top of my scans for several weeks now; shares have risen 64% since the initial public offering.

Rentech is slated to report its second quarter Friday before the open. Analysts are eyeing income of $1.08 per share on revenue of $76.82 million. Those would mark year-over-year increases.

Another small ag name, American Vanguard (AVD) -- which specializes in fungicides and insecticides for crop application -- has been stealthily notching some solid price action recently. On Wednesday morning, the stock was hovering just below its all-time high of $28.88. Shares bolted 13.9% last week in heavy trade following the company's second-quarter report.

American Vanguard's recent pullback could bode well for future price gains. It retreated to a low of $23 on July 26, which undercut the trough of the prior consolidation that had brought shares down to $24 on June 8. Such bottoming action frequently sets the stage for bargain buyers to swoop in and grab shares.

From the health-supplements business, which has been in growth mode for the past few years, weight-loss drink maker Medifast (MED) is building on huge percentage gains in the past couple of months. It climbed 9% in June, and then a whopping 43% last month.

That monster gain in July came on the heels of better-than-expected second quarter earnings. The numbers were spurred by cost cuts, rather than unexpected revenue strength, but revenue was still up 20% for the quarter to $93.6 million. The company received some analyst upgrades following the results, which likewise gave the stock a boost.

In addition to that, a few months ago the company saw development that often leads to price gains: In February, Michael MacDonald was named new CEO. Historically, new management teams tend to bring new life to companies and stocks, as they come in with fresh ideas to shake things up. That, in turn, often results in a rising stock price.

Since early February, Medifast shares have climbed nearly 70%. The stock is currently extended from a buy point, holding about 2.7% above its five-day exponential moving average. A pullback to that price line, or even the 15-day exponential moving average, could offer a new entry point.

The fundamental case for Medifast also looks rosy. Earnings are expected to grow at a rate of just 4% this year, to $1.36 per share. But perhaps the effects of the new management will truly be seen in 2013, with analysts anticipating profit of $1.66 per share, a gain of 22%.

Despite being a fairly well-known brand, Medifast is still a small, thinly traded stock. Its market capitalization is just $447 million, and it trades only 208,000 shares per day. That sparse trade can add extra risk to retail traders, who can get shaken out in a heartbeat if a large institutional holder decides to exit.

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