While Goldman is once again leading the headlines today,
earnings have taken center stage. Just Monday,
) earnings boasted analyst-beating results moved the market
significantly higher. While small cap stock can't move the market
the same way, they are no less powerful. That's why I'm
SXC Health Solutions
) before earnings.
Now, while CAT's earnings surprise and 3% one-day gains are
great, I have a handful of companies to tell you about today that
have a history of trouncing those numbers and those gains.
That's why today I'm going to give you the names of three small
cap stocks that have a history of knocking it out of the park and
are set to do so again in the coming days.
The Power of Small Cap Earnings
As I'm sure you've heard me say, there is nothing more powerful
than a strong earnings report that beats expectations. When a
company can do this consistently, its share price will be rewarded.
Now, no company can do this every quarter and every year for its
entire lifetime. That's why you have to get in when earnings are
hot, grab your profits and get out with your gains. Here's what I
Last year I saw an earnings opportunity in a small-cap security
) had just moved into profitability reporting $4.3 million or 13
cents per share in earnings compared with a loss of $1.1 million or
4 cents per share in the same quarter a year ago.
With a pickup in business and earnings, the company went on to
report two more quarters of solid number -- averaging a 14%
earnings surprise -- and the stock moved up steadily. When the
company failed to meet expectations in its fourth-quarter report,
we promptly reevaluated our position and sold for a 40% gain in
Right now there are a number of small-cap stocks with similar
potential. Here are three that are set to surge this earnings
Buy SXC Health
SXC Health Solutions Corp.
) is what I like to call a bunny stock. This stock loves to "hop"
on earnings. Here's a perfect example. Last quarter, the company
reported that net income came in at $15.2 million, or 49 cents per
share, compared with $5 million, or 20 cents per share a year
This was a 204% increase and sent the stock soaring. The stock
jumped $11 a share or 22% in the following trading day. This is
exactly the kind of stock you want to own during earnings season
and why I'm rating this stock a buy right now. You have another
week or so before the scheduled earnings release on May 6, but
don't sit on this information. You could very well miss the next
Buy Trina Solar
) has had a rough couple of years, and is a stock that can be risky
but pay off big-time when the numbers go your way. TSL was a $10
IPO back in late 2006, and the stock promptly flew to more than $30
a share. But as speculation over the viability of solar power
mounted, oil prices softened and the global markets weakened, TSL
nearly became a bear market statistic. But the company has fought
back from less than $3 a share to its current $25 price.
The company still has a lot to prove, and if the company can
post some solid numbers in its next report, it should win over new
buyers in a significant way. About 90% of the company's sales are
in Europe, primarily from customers in Spain, Germany, Italy and
Belgium, and with more incentives and government support for
alternative energy there, I think TSL can do it. So do yourself a
favor and pick up a few shares in anticipation of TSL's earnings
report on May 24.
Buy HMS Systems
My third and final small-cap pick has been on my
Buy List for about nine months.
) is one of my absolute favorite companies right now -- not just
because of its powerful fundamentals, but because of how it makes
its money. HMSY's mission is to protect our tax dollars by making
sure government health providers are not wasting our money by
overpaying for benefits or overlooking costly errors in billing.
Last quarter the company reported sales growth of 24% and earnings
growth of 36% over last year. The company will report again at the
end of this week on Friday, April 30, and with current revenue
estimates to jump another 29% this quarter, I expect we'll see good
numbers for the timely products of HMSY.
As of this writing, Louis Navellier recommended shares of
SXCI, TSL and HMSY in his small-cap stock newsletter,