This market rally has been running a long time and many stocks are technically extended, but here are three small-caps with good momentum and earnings that should support higher prices. These names trade thinly so they must be closely managed, but the fundamentals should provide support.
Sinclair Broadcast Group (SBGI) is a television broadcasting company that owns, operates or provides programming to 112 television stations in 61 markets. It reaches nearly a third of all U.S. households and is affiliated with FOX, ABC, CBS, NBC and other key networks. The company recently refinanced its debt and cut a deal with DirecTV (DTV) regarding transmission of its programming. In its December quarter, the company earned $0.72 per share vs. consensus estimates of $0.59 and $0.28 in the same quarter in 2011. It is expected to earn $1.38 per share this year and grow that by 70% to $2.35 next year. The company has a trailing price-to-earnings ratio of just 10.
Biolase (BIOL) develops, markets and manufactures dental lasers and imaging equipment. It was recently awarded a number of patents that extend the use of its lasers into ophthalmology and other medical specialties. The company posted record revenue of more than $19 million in its most recent quarter and it is expected to see earnings triple to $0.16 in 2014. The recent acquisition of laser company Palomar Medical Technologies (PMTI) should boost Biolase's valuation.
Consumer Portfolio Services (CPSS) provides indirect subprime auto financing. It purchases retail installment contracts secured mostly by used cars sold by franchised auto dealerships. The company recently renewed a $100 million credit facility with affiliates of Goldman Sachs. In its most recent quarter, the company earned $0.16 compared with $0.01 a year earlier. It is expected to earn $0.66 in 2013 and nearly double that to $1.35 in 2014.