The stock market's sizzling start this year has unquestionably benefited small-cap investors. Of the 15 stocks in our Best Small Cap for 2007 contest, 11 are in positive territory, with 10 already producing double-digit returns. The leader is Ryan Fuhrmann's pick, Dawson Geophysical (NASDAQ:DWSN), with a phenomenal return of 54.7% since Dec. 7.
Last month, the seismic surveyor reported impressive earnings, with EPS growth of 22% on a 50% increase in revenue year over year. The future continues to look favorable; the company is operating at full capacity, with all 14 of its seismic data acquisition crews booked through the end of 2007, and several booked into 2008.
Within striking distance of the top spot, you'll find Atheros Communications (NASDAQ:ATHR), with a return of 42.3%. The company, which produces equipment for wireless communication products, announced an increase in Q1 profits of 12%, with revenue improving by 56%. Atheros is coming off its eighth consecutive quarter of record revenue. Another steady performer in the top three is mattress manufacturer Tempur-Pedic International (NYSE:TPX). It's up 30.4%, and it recently raised its full-year forecast on better-than-expected Q1 results.
Few small caps fizzled in this group. However, shareholders of KongZhong (NASDAQ:KONG) have seen its shares fall more than 40%. In May, the company reported a 20% decline in its Q1 revenue, as its adjusted profit dropped from $7.9 million to $2.1 million year over year. KongZhong shares are now close to a 52-week low. The company faces more trying times, given China Mobile's (NYSE:CHL) recent decision to advertise only its own products, rather than KongZhong's, on the embedded menus of its handsets.
With that said, here are the best and the worst of the first half:
|
Stock |
Change In Stock Price |
|---|---|
|
Dawson Geophysical |
54.7% |
|
Atheros |
42.3% |
|
Tempur-Pedic |
30.4% |
|
American Science & Engineering (NASDAQ:ASEI) |
-14.6% |
|
Encysive Pharmaceuticals (NASDAQ:ENCY) |
-32.3% |
|
KongZhong |
-42.7% |
Will Dawson's momentum be enough, or could one of the other highfliers run it down in the second half? The Fool wants to hear your opinions on the picks for the best small cap, so check out our Motley Fool CAPS community intelligence database, which already has more than 30,000 members, and add your rating for each of these stocks.
Dawson Geophysical and Atheros Communications are Motley Fool Hidden Gems recommendations. Try our market-beating small-cap investing newsletter free for 30 days.
Fool contributor Billy Fisher does not own shares of any of the companies mentioned. American Science & Engineering and Encysive Pharmaceuticals are Rule Breakers recommendations. The Fool has a disclosure policy.
