๐งต๐ 20 Undervalued Small Cap Quality Stocks
A few weeks ago we asked you on Twitter about the highest small cap quality stocks you know of. We got more than 200 answers (!) with more than 100 companies mentioned.
In this thread, we'll discuss the 20 best stocks โฌ๏ธโฌ๏ธโฌ๏ธ
A few weeks ago we asked you on Twitter about the highest small cap quality stocks you know of. We got more than 200 answers (!) with more than 100 companies mentioned.
In this thread, we'll discuss the 20 best stocks โฌ๏ธโฌ๏ธโฌ๏ธ
To filter every response we received, we used a few Quality Criteria. Each company selected has:
- A healthy balance sheet
- High profitability
- Excellent capital allocation
- Attractive outlook (expected growth)
- Strong compounder (good stock market performance)
- A healthy balance sheet
- High profitability
- Excellent capital allocation
- Attractive outlook (expected growth)
- Strong compounder (good stock market performance)
Please note that the information provided in this article is far too insufficient to buy a certain stock.
Always do your own homework before buying a company.
Always do your own homework before buying a company.
Company 1: SDI Group ($SDI.L)
SDI Group designs and manufactures scientific and technology products like control systems and scientific imaging.
- Profit Margin: 15.2%
- ROIC: 18.4%
- Earnings yield: 6.9%
- Expected EPS Growth (3 yr): 16.1%
- CAGR since IPO: 20.8% (2008)
SDI Group designs and manufactures scientific and technology products like control systems and scientific imaging.
- Profit Margin: 15.2%
- ROIC: 18.4%
- Earnings yield: 6.9%
- Expected EPS Growth (3 yr): 16.1%
- CAGR since IPO: 20.8% (2008)
Company 2: MIPS ($MIPS.ST)
MIPS manufactures and sells sports helmets. The Company offers a brain protection system for the helmet market.
- Profit Margin: 41.9%
- ROIC: 59.6%
- Earnings yield: 2.6%
- Expected EPS Growth (3 yr): 15.3%
- CAGR since IPO: 45.1% (2017)
MIPS manufactures and sells sports helmets. The Company offers a brain protection system for the helmet market.
- Profit Margin: 41.9%
- ROIC: 59.6%
- Earnings yield: 2.6%
- Expected EPS Growth (3 yr): 15.3%
- CAGR since IPO: 45.1% (2017)
Company 3: OTC Markets ($OTCM)
OTC Markets regulates the trading systems and connects a diverse network of broker-dealers.
- Profit Margin: 29.6%
- ROIC: 66.2%
- Earnings yield: 5.6%
- Expected EPS Growth (3 yr): 11.3%
- CAGR since IPO: 27.9% (2009)
OTC Markets regulates the trading systems and connects a diverse network of broker-dealers.
- Profit Margin: 29.6%
- ROIC: 66.2%
- Earnings yield: 5.6%
- Expected EPS Growth (3 yr): 11.3%
- CAGR since IPO: 27.9% (2009)
Company 4: Team17 ($TM17.L)
Team17 Group PLC develops game software. The Company publishes games for computer, console, and mobile devices.
- Profit Margin: 26.2%
- ROIC: 12.3%
- Earnings yield: 6.4%
- Expected EPS Growth (3 yr): 18.3%
- CAGR since IPO: 21.7% (2018)
Team17 Group PLC develops game software. The Company publishes games for computer, console, and mobile devices.
- Profit Margin: 26.2%
- ROIC: 12.3%
- Earnings yield: 6.4%
- Expected EPS Growth (3 yr): 18.3%
- CAGR since IPO: 21.7% (2018)
Company 5: Kelly Partners Group ($KPG.AX)
Kelly Partners Group is a serial acquirer providing accounting and taxation services.
- Profit Margin: 8.6%
- ROIC: 20.0%
- Earnings yield: 4.8%
- Expected EPS Growth next (3 yr): 23.3%
- CAGR since IPO: 42.4% (2017)
Kelly Partners Group is a serial acquirer providing accounting and taxation services.
- Profit Margin: 8.6%
- ROIC: 20.0%
- Earnings yield: 4.8%
- Expected EPS Growth next (3 yr): 23.3%
- CAGR since IPO: 42.4% (2017)
Company 6: Xpel ($XPEL)
Xpel develops and manufactures automotive protection products offering window and protective film for automobiles.
- Profit Margin: 12.2%
- ROIC: 30.8%
- Earnings yield: 2.4%
- Expected EPS Growth next 3 years: 31.4%
- CAGR since IPO: 25.3% (2006)
Xpel develops and manufactures automotive protection products offering window and protective film for automobiles.
- Profit Margin: 12.2%
- ROIC: 30.8%
- Earnings yield: 2.4%
- Expected EPS Growth next 3 years: 31.4%
- CAGR since IPO: 25.3% (2006)
Company 7: Livechat ($LVC.WA)
LiveChat is a software company that provides communication tools, offering live chat rooms and greetings for business.
- Profit Margin: 56.0%
- ROIC: 86.7%
- Earnings yield: 5.1%
- Expected EPS Growth (3 yr): 12.8%
- CAGR since IPO: 29.2% (2014)
LiveChat is a software company that provides communication tools, offering live chat rooms and greetings for business.
- Profit Margin: 56.0%
- ROIC: 86.7%
- Earnings yield: 5.1%
- Expected EPS Growth (3 yr): 12.8%
- CAGR since IPO: 29.2% (2014)
Company 8: InMode ($INMD)
InMode develops medical devices, manufacturing platforms that harness novel radio-frequency based technology.
- Profit Margin: 46.1%
- ROIC: 48.0%
- Earnings yield: 6.0%
- Expected EPS Growth (3 yr): 14.6%
- CAGR since IPO: 64.3% (2019)
InMode develops medical devices, manufacturing platforms that harness novel radio-frequency based technology.
- Profit Margin: 46.1%
- ROIC: 48.0%
- Earnings yield: 6.0%
- Expected EPS Growth (3 yr): 14.6%
- CAGR since IPO: 64.3% (2019)
Company 9: Games Workshop ($GAW.L)
Games Workshop Group manufactures and retails tabletop war-game systems and associated miniatures.
- Profit Margin: 31.0%
- ROIC: 51.2%
- Earnings yield: 4.5%
- Expected EPS Growth (3 yr): 13.2%
- CAGR since IPO: 20.6% (1994)
Games Workshop Group manufactures and retails tabletop war-game systems and associated miniatures.
- Profit Margin: 31.0%
- ROIC: 51.2%
- Earnings yield: 4.5%
- Expected EPS Growth (3 yr): 13.2%
- CAGR since IPO: 20.6% (1994)
Company 10: Semler Scientific ($SMLR)
Semler Scientific is a medical risk-assessment company developing markets diagnostic and testing products.
- Profit Margin: 32.5%
- ROIC: 28.7%
- Earnings yield: 3.7%
- Expected EPS Growth (3 yr): 15.5%
- CAGR since IPO: 23.0% (2014)
Semler Scientific is a medical risk-assessment company developing markets diagnostic and testing products.
- Profit Margin: 32.5%
- ROIC: 28.7%
- Earnings yield: 3.7%
- Expected EPS Growth (3 yr): 15.5%
- CAGR since IPO: 23.0% (2014)
Company 11: Talenom ($TNOM.HE)
Talenom operates as an accounting company offering accounting, bookkeeping, taxation, and other financial services.
- Profit Margin: 13.0%
- ROIC: 11.9%
- Earnings yield: 3.1%
- Expected EPS Growth (3 yr): 17.3%
- CAGR since IPO: 38.1% (2015)
Talenom operates as an accounting company offering accounting, bookkeeping, taxation, and other financial services.
- Profit Margin: 13.0%
- ROIC: 11.9%
- Earnings yield: 3.1%
- Expected EPS Growth (3 yr): 17.3%
- CAGR since IPO: 38.1% (2015)
Company 12: Qualys ($QLYS)
Qualys, is a cybersecurity company offering information technology security risk and compliance management solutions.
- Profit Margin: 17.3%
- ROIC: 23.0%
- Earnings yield: 3.1%
- Expected EPS Growth next 3 years: 3.1%
- CAGR since IPO: 21.2% (2012)
Qualys, is a cybersecurity company offering information technology security risk and compliance management solutions.
- Profit Margin: 17.3%
- ROIC: 23.0%
- Earnings yield: 3.1%
- Expected EPS Growth next 3 years: 3.1%
- CAGR since IPO: 21.2% (2012)
Company 13: Admicom ($ADMCM.HE)
Admicom develops enterprise software. Admicom offers enterprise resource planning and management systems.
- Profit Margin: 32.4%
- ROIC: 30.0%
- Earnings yield: 4.4%
- Expected EPS Growth (3 yr): 20.7%
- CAGR since IPO: 46.5% (2018)
Admicom develops enterprise software. Admicom offers enterprise resource planning and management systems.
- Profit Margin: 32.4%
- ROIC: 30.0%
- Earnings yield: 4.4%
- Expected EPS Growth (3 yr): 20.7%
- CAGR since IPO: 46.5% (2018)
Company 14: HMS Networks ($HMS.ST)
HMS Networks develops and markets communication technology for industrial automation. The Company sells worldwide.
- Profit Margin: 18.0%
- ROIC: 24.2%
- Earnings yield: 2.9%
- Expected EPS Growth (3 yr): 12.8%
- CAGR since IPO: 23.7% (2007)
HMS Networks develops and markets communication technology for industrial automation. The Company sells worldwide.
- Profit Margin: 18.0%
- ROIC: 24.2%
- Earnings yield: 2.9%
- Expected EPS Growth (3 yr): 12.8%
- CAGR since IPO: 23.7% (2007)
Company 15: Cerillion ($CER.L)
Cerillion designs and develops customer management systems offering network asset management and billing operations.
- Profit Margin: 24.7%
- ROIC: 36.7%
- Earnings yield: 4.4%
- Expected EPS Growth (3 yr): 12.8%
- CAGR since IPO: 52.4% (2016)
Cerillion designs and develops customer management systems offering network asset management and billing operations.
- Profit Margin: 24.7%
- ROIC: 36.7%
- Earnings yield: 4.4%
- Expected EPS Growth (3 yr): 12.8%
- CAGR since IPO: 52.4% (2016)
Company 16: Topicus ($TOI.V)
Topicus is a spin-off from Constellation Software. The company is a serial acquirer with a strong focus on Europe.
- Profit Margin: 2.2%
- ROIC: 19.5%
- Earnings yield: 4.6%
- Expected EPS Growth next 3 years: 14.4%
- CAGR since IPO: /
Topicus is a spin-off from Constellation Software. The company is a serial acquirer with a strong focus on Europe.
- Profit Margin: 2.2%
- ROIC: 19.5%
- Earnings yield: 4.6%
- Expected EPS Growth next 3 years: 14.4%
- CAGR since IPO: /
Company 17: Wingstop ($WING)
Wingstop operates restaurants, specializing in cooked-to-order, hand-sauced, and tossed chicken wings.
- Profit Margin: 15.1%
- ROIC: 23.9%
- Earnings yield: 0.4% (very expensive)
- Expected EPS Growth (3 yr): 20.3%
- CAGR since IPO: 37.2% (2015)
Wingstop operates restaurants, specializing in cooked-to-order, hand-sauced, and tossed chicken wings.
- Profit Margin: 15.1%
- ROIC: 23.9%
- Earnings yield: 0.4% (very expensive)
- Expected EPS Growth (3 yr): 20.3%
- CAGR since IPO: 37.2% (2015)
Company 18: Chemometec ($CHEMM.CO)
Chemometec makes instruments used to analyze particles like mammalian cells, sperm cells, and yeast cells.
- Profit Margin: 37.7%
- ROIC: 44.1%
- Earnings yield: 1.1%
- Expected EPS Growth next 3 years: 33.4%
- CAGR since IPO: 25.9% (2006)
Chemometec makes instruments used to analyze particles like mammalian cells, sperm cells, and yeast cells.
- Profit Margin: 37.7%
- ROIC: 44.1%
- Earnings yield: 1.1%
- Expected EPS Growth next 3 years: 33.4%
- CAGR since IPO: 25.9% (2006)
Company 19: Robertet ($RBT.PA)
Robertet produces liquid flavorings, perfumes and associated natural aromatic ingredients.
- Profit Margin: 11.8%
- ROIC: 11.4%
- Earnings yield: 3.3%
- Expected EPS Growth (3 yr): 3.5%
- CAGR since IPO: 15.7% (1990)
Robertet produces liquid flavorings, perfumes and associated natural aromatic ingredients.
- Profit Margin: 11.8%
- ROIC: 11.4%
- Earnings yield: 3.3%
- Expected EPS Growth (3 yr): 3.5%
- CAGR since IPO: 15.7% (1990)
Company 20: PubMatic ($PUBM)
PubMatic provides integrated inventory, data, and advertising revenue optimization platform for digital publishers.
- Profit Margin: 25.0%
- ROIC: 18.5%
- Earnings yield: 7.1%
- Expected EPS Growth next 3 years: 10.4%
- CAGR since IPO: /
PubMatic provides integrated inventory, data, and advertising revenue optimization platform for digital publishers.
- Profit Margin: 25.0%
- ROIC: 18.5%
- Earnings yield: 7.1%
- Expected EPS Growth next 3 years: 10.4%
- CAGR since IPO: /
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