5 Small Cap Stocks to Buy (IPXL, NFLX, SKX, SPRD, NVMI)


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It comes as no surprise that some of the best small-cap stocks this month are in the high-tech and retail industries. Small-cap technology companies are gearing up for some spectacular earnings announcements this summer. While retail companies are, as a sector, not faring as well as plays in other industries, the ones on this list are exceptions to the trend, posting strong sales increases. So let's get right to the top 5 small-cap stocks to buy.

Impax Laboratories ( IPXL ) is an innovative drugmaker that is constantly seeking a cheaper way to bring specialty generic pharmaceuticals to patients around the world. With some of the sharpest minds in the pharmaceuticals industry, IPXL is developing drugs that target Parkinson's disease, epilepsy and other central nervous system disorders.  Impax recently announced that it is challenging a patent on Abbott Laboratories' cholesterol drug Trilipix and plans to bring its own version to market.  As a result of this promising announcement, analysts have revised their earnings estimates for IPXL 182% higher in the past three months. They now predict the company will report earnings per share of $0.56 and revenue of $173.4 million. Respectively, these represent a 1,020% and 198% year-over-year increase!

Netflix Inc. ( NFLX ) is a movie rental company that has developed an ingenious business model built around the idea that individuals don't want to leave their houses in order to rent a movie. Instead, Netflix sends movies directly to consumers; through the mail. People walk no further than their mailboxes to rent DVDs. My Wall Street friends tell me that they think the company's sales will increase 28.3% and earnings will move up 31.5% this quarter, but I suspect these figures will be even higher. Why do I say this? Because Netflix recently announced a $300 million stock buy-back program through 2012. This shows that the company is confident in its performance and expects future growth. The company has gained nearly 4% since last month and, I predict, will continue to expand in the months ahead.

Skechers USA Inc. ( SKX ) is one of the hottest and most successful shoe companies on the market today. The billion-dollar-plus company offers 3,000 styles of trendy footwear in all different shapes and sizes for men, women and children. The company sells its shoes mainly through department and specialty stores, but also in its 200 company-owned outlets and on its web site. In the first quarter, the company reported a 43.5% increase in sales and an incredible 539% surge in earnings. For the current quarter, analysts are forecasting continued growth, with earnings near $0.41 per share and year-over-year sales growth of 42%.

Spreadtrum Communications ( SPRD ) designs and markets baseband communications chips for the red-hot wireless telecom market. The company's semiconductors, which are compatible with a range of international wireless standards, are sold to manufacturers of cell phones which then incorporate them into their products. Spreadtrum sells directly to customers in China through a subsidiary in Shanghai, while its U.S. operations focus on administration and research and development efforts.  For the second quarter, SPRD is forecasting continued growth. Sales are expected to reach between $65 million and $68 million. Analysts predict that Spreadtrum's sales will rise 305.7% year-over-year and earnings will increase 163%. On top of this, in the past three months, analysts have revised their earnings estimates 127.8% higher! The stock likely will surge in advance of the company's earnings announcement in mid-August so be sure to get in on this stock now.

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. NVMI recently announced a series of new orders from major companies. A large foundry and a DRAM manufacturer signed contracts with NVMI to supply measuring equipment to their factories. The company said that it will ship these orders through the next quarter so expect to see a bounce in sales when financial results for the current quarter are reported.  According to my screens, this stock shows strong sales growth and buying pressure, which will both be beneficial as we enter earnings season.

As of this writing, Louis Navellier was recommending all of these stocks to subscribers of his Emerging Growth newsletter.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Stocks

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Louis Navellier

Louis Navellier

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