Consistently rising profits are a good omen for a small-cap company. While the word "profit" has many different implications, here we focus on diluted normalized earnings per share values that have increased over three consecutive years.

Normalized EPS is a company's earnings per share without accounting for one-time earnings and irregular expenses. Unlike regular EPS, diluted EPS takes into account convertible securities such as options, warrants, and convertible preferred shares that could be exercised and lower net income.

Therefore, diluted normalized EPS is typically lower (and more conservative) than regular EPS.

Price-to-sales ratio
The price-to-sales ratio tells you how much a stock's current price is worth relative to revenue per sale. Be mindful that this ratio does not account for expenses or debt, and that there is normal variation between industries.

Here we screened for companies with a price-to-sales ratio of 1.5 or below. In other words, one dollar of share price is worth at most $1.50 in sales. We chose this limit after speaking with Neil Hennessy, portfolio manager and chief investment officer of Hennessy Mutual Funds, who said this is one of his favorite investing strategies.

Business section: Investing ideas
We ran a screen based on the following criteria:

  • Consistently rising profits
  • P/S ratio below 1.5
  • Market cap ranging $300 million to $2 billion
  • Closing price from April 26

Below are the stocks our screen pulled up.

(Click here to access free, interactive tools to analyze these ideas.)

1. Andersons (Nasdaq: ANDE): Engages in the agriculture and transportation businesses in the United States. The company has a market cap of $929.6 million, most recent closing price at $51.01. Diluted normalized EPS increased from $1.79 to $2.08 during the first time interval (12 months ending Dec. 31, 2009 vs. 12 months ending Dec. 31, 2008). For the second time interval, diluted normalized EPS increased from $2.08 to $3.48 (12 months ending Dec. 31, 2010 vs. 12 months ending Dec. 31, 2009). And for the last time interval, the EPS increased from $3.48 to $5.09 (12 months ending Dec. 31, 2011 vs. 12 months ending Dec. 31, 2010). Price/sales ratio of 0.21. Shares shorted have decreased from 1.28 million to 1.10 million over the last month, a decrease which represents about 1.04% of the company's float of 17.25 million shares. Days-to-cover ratio stands at 6.5 days.

2. AmeriGas Partners (NYSE: APU): Operates as a retail and wholesale distributor of propane gas in the United States. The company has a market cap of $3.73 billion, most recent closing price at $40.20. Diluted normalized EPS increased from $2.70 to $2.85 during the first time interval (12 months ending Sept. 30, 2009 vs. 12 months ending Sept. 30, 2008). For the second time interval, diluted normalized EPS increased from $2.85 to $2.90 (12 months ending Sept. 30, 2010 vs. 12 months ending Sept. 30, 2009). And for the last time interval, the EPS increased from $2.90 to $2.93 (12 months ending Sept. 30, 2011 vs. 12 months ending Sept. 30, 2010). Price/sales ratio of 1.48. Shares shorted have decreased from 913,420 to 256,860 over the last month, a decrease which represents about 1.81% of the company's float of 36.28 million shares. Days-to-cover ratio stands at 0.8 days.

3. Echo Global Logistics (Nasdaq: ECHO): Provides technology-enabled transportation and supply chain management services in the United States. The company has a market cap of $376.43 million, most recent closing price at $16.85. Diluted normalized EPS increased from $0.14 to $0.33 during the first time interval (12 months ending Dec. 31, 2009 vs. 12 months ending Dec. 31, 2008). For the second time interval, diluted normalized EPS increased from $0.33 to $0.51 (12 months ending Dec. 31, 2010 vs. 12 months ending Dec. 31, 2009). And for the last time interval, the EPS increased from $0.51 to $0.54 (12 months ending Dec. 31, 2011 vs. 12 months ending Dec. 31, 2010). Price/sales ratio of 0.62. Shares shorted have decreased from 1.92 million to 1.67 million over the last month, a decrease which represents about 2.15% of the company's float of 11.64 million shares. Days-to-cover ratio stands at 18.49 days.

4. Netflix (Nasdaq: NFLX): Provides subscription-based Internet services for TV shows and movies in the United States and internationally. The company has a market cap of $4.71 billion, most recent closing price at $85.07. Diluted normalized EPS increased from $1.26 to $1.94 during the first time interval (12 months ending Dec. 31, 2009 vs. 12 months ending Dec. 31, 2008). For the second time interval, diluted normalized EPS increased from $1.94 to $2.89 (12 months ending Dec. 31, 2010 vs. 12 months ending Dec. 31, 2009). And for the last time interval, the EPS increased from $2.89 to $4.26 (12 months ending Dec. 31, 2011 vs. 12 months ending Dec. 31, 2010). Price/sales ratio of 1.47. Shares shorted have decreased from 10.88 million to 9.20 million over the last month, a decrease which represents about 3.11% of the company's float of 54.09 million shares. Days-to-cover ratio stands at 1.42 days.

5. Penske Automotive Group: Operates as an automotive retailer in the United States, Puerto Rico, the United Kingdom, and Germany. The company has a market cap of $2.43 billion, most recent closing price at $26.85. Diluted normalized EPS increased from $0.06 to $0.80 during the first time interval (12 months ending Dec. 31, 2009 vs. 12 months ending Dec. 31, 2008). For the second time interval, diluted normalized EPS increased from $0.80 to 1.33 (12 months ending Dec. 31, 2010 vs. 12 months ending Dec. 31, 2009). And for the last time interval, the EPS increased from $1.33 to $1.92 (12 months ending Dec. 31, 2011 vs. 12 months ending Dec. 31, 2010). Price/sales ratio of 0.21. Shares shorted have decreased from 6.43 million to 5.79 million over the last month, a decrease which represents about 1.51% of the company's float of 42.33 million shares. Days-to-cover ratio stands at 11.33 days.

6. rue21 (NYSE: RUE): Operates as a specialty apparel retailer in the United States. The company has a market cap of $738.56 million, most recent closing price at $30.17. Diluted normalized EPS increased from $0.56 to $0.96 during the first time interval (52 weeks ending Jan. 30, 2010 vs. 52 weeks ending Jan. 31, 2009). For the second time interval, diluted normalized EPS increased from $0.96 to $1.22 (52 weeks ending Jan. 29, 2011 vs. 52 weeks ending Jan. 30, 2010). And for the last time interval, the EPS increased from $1.22 to $1.56 (52 weeks ending Jan. 28, 2012 vs. 52 weeks ending Jan. 29, 2011). Price/sales ratio of 0.97. Shares shorted have decreased from 5.14 million to 4.61 million over the last month, a decrease which represents about 3.4% of the company's float of 15.57 million shares. Days-to-cover ratio stands at 16.45 days.

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.