Small-Caps on My Radar

 | Oct 05, 2011 | 11:16 AM EDT  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

aapl

,

ms

,

mitk

,

wwww

,

ccix

,

esic

We have some choppy early action as the bulls remain hopeful for some positive news out of Europe and the failure to quickly reverse back down makes the bears nervous. Moves like we had in the last hour yesterday tend to gain further traction, especially when early attempts to fade them are unsuccessful.

Breadth is solid at better than 2 to 1 and if Apple (AAPL) and Morgan Stanley (MS) can stabilize, that should give the buyers a bit more confidence. Coal, oil, steel and semiconductors are leading, while gold, retail and regional banks are the laggards.

As I commented this morning the big problem for trend trades and momentum players in this sort of market is that there aren't any good charts. If you want to buy, you have to be looking for oversold bounces and value plays.

While I don't like to buy downtrending stocks, I maintain a shopping list of small-caps that have been sinking but appear to be good values.  If the price action improves in these stocks I'll be looking to buy them aggressively. But I want to see positive action and have little interest in building them when they are still at their lows.

Here are four small caps on my radar for a better market:

Mitek Systems (MITK) doesn't have big earnings numbers yet, but is the most interesting story. They offer technology that allows you to use your smartphone as a scanning device. This allows you to deposit checks into your bank account, send scanned documents, etc. They have signed a number of deals with major banks and look to be gaining operational momentum. I think this one will see a lot of attention next year as it starts to cash in on its technology.

Web.com (WWWW) has been working to complete the acquisition of Network Solutions, which will give them a very profitable niche in the domain-name registration business. Current analyst estimates are for EPS to grow 44% to $1.04 in 2011 and another 17% to $1.22 in 2012. The current trailing P/E is 8.

Coleman Cable (CCIX) provides cable and wire. While it isn't a very exciting business, current estimates are for 115% EPS growth in 2011 to $1.42 and another 17% in 2012 to $1.66. Current tailing P/E is 8.

EasyLink Services (ESIC) is a cloud-computer-related play that will issue earnings any day. In its most recent quarter it saw earnings double to 20 cents a share and revenues grow 132%.  The company recent affirmed that it will meet the high-end of its fiscal 2011 guidance range. The company sells with a trailing P/E of 8 as well.

There are many other small stocks like that out there and when we have a better market they will provide great opportunities. Have those shopping lists ready.

Columnist Conversations

IRF is trading $39.10, up 47.2%. The news is easy enough: Infineon agrees to buy Int'l Rectifier for $3 bill...
HPQ: Long term signals for HPQ have been quite good. Long term oversold on the weekly charts came in: 2002 ...
IRF
In great tapes like this one Goldman Sachs downgrades the semis and then two days later IRF gets a monster bid...
As the Nasdaq marches to new highs and market watchers debate whether these equity levels are sustainable, no ...

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.