Investors are always hunting for the next big stock -- the dream stock whose price increases several times over when the market finally discovers it. It's easy to look back and discover the 10 best stocks of the past decade. But I'm more interested in the tools that can help me evaluate tomorrow's greatest companies.
Motley Fool CAPS offers a variety of resources to aid Fools in finding tomorrow's leaders. Our 130,000-plus-member community is full of investors helping each other beat the market.
We'll enlist CAPS to screen for small-cap stocks, then get the story behind some of its more highly rated companies. CAPS' nifty screener will help us find stocks with:
- A market cap between $100 million and $1 billion.
- A three-year revenue growth rate of at least 20%.
- A price-to-earnings ratio of less than 25.
Then we'll tap the collective intelligence of our CAPS members to see whether these companies present real opportunities -- or whether the numbers fail to tell the true story.
Opinions with the numbers
Below is a sample of the stocks our screen returned. You can run this screen yourself -- remember, though, that your results may differ from ours as the market changes.
|
Company |
Revenue Growth Rate, Past 3 Years |
CAPS Rating (out of 5) |
|---|---|---|
|
Dynamic Materials (NASDAQ:BOOM) |
34.9% |
***** |
|
Vaalco Energy (NYSE:EGY) |
26.0% |
***** |
|
Golden Star Resources (NYSE:GSS) |
39.9% |
**** |
Data and star rankings from CAPS as of May 11.
Dynamic Materials
Dynamic Materials didn't go out with a bang, but it certainly felt the effects of slower spending in the economy in the first quarter as it reported slower sales in its explosion welding unit, citing cautious customers, currency rate changes, and constrained credit as reasons for the revenue dip. But the company expects that increased international infrastructure projects will help keep it busy in the future, and the firm is also working to expand its presence in the Middle East. Shares have had a big run off of a March bottom recently, but many CAPS members believe there is still plenty of future growth potential in the company, especially when the economy turns around. At this point, nearly 98% of the 1,364 members rating Dynamic Materials expect it to outpace returns of the broader market.
Vaalco Energy
Similar to the poor showing from oil giants ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX), Vaalco Energy took a hit to first-quarter revenue and earnings due to the decline in crude prices from last year and added some sting to the losses with costs of unfruitful wells. But the company is still moving forward and looking to add reserves with new exploration opportunities in the pipeline. It expects production to come in about 11% over last year, and many investors are bullish on the long-term outlook for oil with an expectation for higher crude prices as well. Today, 97% of the 1,544 CAPS members rating Vaalco see it beating the market.
Golden Star Resources
Many CAPS members like the outlook for Golden Star Resources, with 95% of the 729 members rating the gold mining and exploration firm bullish. The company recently followed up record annual gold sales in 2008 with quarterly gold sales of nearly 97,000 ounces in the first quarter, a 69% jump over last year's first quarter. It increased its realized gold price by 12% over the fourth quarter, and revenue jumped 65% year over year. While the top line continues to expand, the company is working to bring its cost per ounce down and is showing progress at its Wassa property.
Similar to larger peers Barrick Gold (NYSE:ABX) and Newmont Mining (NYSE:NEM), Golden Star expects increased production this year. It teamed up with Newmont a few years back at its Saramacca project, as the larger miner funds the exploration there through its joint venture with the company. Golden Star also expects to have enough liquidity to meet all of its capital requirements this year, something that few other firms can express confidently these days.
Let 130,000 members be the jury
The collective wisdom of a huge pool of investors can help give context to a page of numbers from a stock screen -- but individual investors are still the judge. Fools should always perform their own due diligence.
Run your favorite factors through the Motley Fool CAPS screener. It's totally free, and we think you'll like the results.
