Are your investments going to fail you this earnings
season?
Four times per year we cross an invisible barrier. You
definitely can't see it but you can certainly feel the powerful
change from it. I'm talking about earnings season. We've
officially ended the first quarter and earnings announcements are
right around the corner.
I expect the S&P 500's operating earnings to be up almost
70% during the first quarter. Many lumbering blue chip stocks
will see modest growth as part of this trend, but small cap
stocks with explosive potential is where the real opportunity is
for investors. Strong earnings are often rewarded with
double-digit gains in just a few days after a great report - so
now is the time to buy into the best small cap stocks before the
earnings surge!
Here are my five favorite small cap earnings giants for the
upcoming first-quarter reporting season.
NEXT - Small Cap Stock #1: IGLD
Are your investments going to fail you this earnings
season?
Small Cap Stock #1: Internet Gold-Golden Lines (
IGLD
)
Internet Gold-Golden Lines
(
IGLD
) is one of Israel's largest Internet Service Providers with
more than 960,000 home subscribers and about 90,000 business
customers through its Smile.com subsidiary. The company's other
services include virtual private networking and Web hosting.
Israeli stocks in general are good bets right now since the
country's currency, the shekel, has strengthened in the wake of
the Bank of Israel's raising its benchmark interest rate in the
past two months to 1.25%.
In the fourth quarter, Internet Gold-Golden Lines' sales
rose 3.7% to $86 million compared with $84.36 million during
the same quarter a year ago. During the same period, its
operating earnings rose 104.7% to $15 million, compared with
$7.48 million. For the past three months, analysts have revised
their consensus earnings estimates a substantial 35.5% higher,
which points to a future earnings surprise when it posts Q1
numbers.
NEXT - Small Cap Stock #2: IPXL
Are your investments going to fail you this earnings
season?
Small Cap Stock #2: Impax Laboratories (
IPXL
)
Impax Laboratories Inc.
(
IPXL
) is an innovative drugmaker that is constantly seeking a
cheaper way to bring specialty generic pharmaceuticals to
patients around the world. The company concentrates on
controlled-release versions of drugs and niche pharmaceuticals
that require difficult-to-obtain raw materials or specialized
expertise.
In the fourth quarter, the company sales soared almost
fourfold to $176.1 million compared with the same quarter a
year earlier. During the same period, Impax Laboratories'
earnings rose an incredible 306.7%, to $38.1 million, or 61
cents per share, compared with $9 million, or 15 cents per
share. The company's operating earnings were 69 cents per
share. The analyst community was expecting operating earning of
14 cents per share on sales of $91.4 million, so Impax
Laboratories posted a whopping 392.9% earnings surprise and a
stunning 92.7% sales surprise. Analysts have raised their
earnings consensus estimates upward a whopping 254.3% just in
the past month, so I am definitely expecting a great earnings
surprise from IPXL when it reports earnings.
NEXT - Small Cap Stock #3: NVMI
Are your investments going to fail you this earnings
season?
Small Cap Stock #3: Nova Measuring Instruments (
NVMI
)
Nova Measuring Instruments Ltd.
(
NVMI
) makes optics to measure microscopic images. The company's
NovaScan and NovaTrack optical monitoring systems are
integrated into wafer polishers and other semiconductor
processing equipment to measure the thickness of semiconductor
layers during critical steps of chip manufacturing. The
company's customers, such as Applied Materials, Ebara, Lam
Research and Novellus, integrate Nova's tools into their
equipment. Nova also sells its standalone systems
directly to manufacturers.
In the fourth quarter, the company's sales rose 145% to
$15.2 million compared with the same quarter a year earlier.
During the same period, Nova's earnings rose to $2.7 million,
or 13 cents per share compared with a loss of $1.6 million or
eight cents per share. The company recently announced that it
has received record quarterly orders, which bodes well for the
upcoming earnings report from NVMI.
NEXT - Small Cap Stock #4: IMAX
Are your investments going to fail you this earnings
season?
Small Cap Stock #4: IMAX Corp. (
IMAX
)
IMAX Corp.
(
IMAX
) is a small company with a market cap of less than $1 billion,
but its technology is so innovative that this stock is a
household name. This pick makes and leases projection and sound
systems for over 350 giant-screen IMAX theaters in more than 40
countries. IMAX's fourth-quarter earnings were spectacular
thanks to the blockbuster movie
Avatar.
But the continued strength of this movie in the theaters
as well as new 3D offerings means the ride isn't over yet.
The analyst community has revised its consensus earnings
estimates an absolutely astounding 794.5% higher during the
past three months. For the first quarter, the analyst community
now is expecting IMAX to post 99.3% sales growth and earnings
of 30 cents per share compared with a loss of six cents per
share in the same quarter a year ago. Add shares of IMAX today
to your portfolio if you want to ride the Q1 earnings
surge.
NEXT - Small Cap Stock #5: CREE
Are your investments going to fail you this earnings
season?
Small Cap Stock #5: Cree Inc. (
CREE
)
Cree Inc.
(
CREE
) is "lighting up Wall Street" with its cutting-edge,
light-emitting diodes - or LEDs. These next-generation lights
are more efficient and more versatile, making the old
incandescent lights of my youth another piece of outdated
technology like the eight-track tape players, VCRs and floppy
computer disks. The company sells its products globally, but
Asia accounts for more than two-thirds of its overall
sales.
In its latest quarter, which ended Dec. 27, Cree's sales
rose 35.2% to $199.5 million compared with $147.6 million in
the same quarter a year ago. During the same period, its
earnings rose 166.7% to $33.8 million, or 32 cents per share,
compared with $10.7 million, or 12 cents per share last year.
Looking forward, Cree expects that its current quarterly
earnings will come in between 41 cents to 44 cents per share.
In the past three months, the analyst community has revised its
consensus earnings estimate 34.2% higher. Typically, such
strong earnings revisions precede future earnings surprises.
Since Cree's operating margins are expanding rapidly, I would
not be surprised if the company has another whopping earnings
surprise in store.
Are Your Investments Going to Fail You This Earnings
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