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This post examines 5 small cap stocks that are financially sound investments with profitable track records. Each has an above average Return on Equity, a current ratio above 2 and, to top it off, each has a consensus analyst expectation of a 20%+ return for investors in 2017.
The comments above and below are excerpts from an article by SmallCapPower.com which has been edited ([ ]) and abridged (…) to provide a fast & easy read.
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Return on Equity (ROE) is a metric used to assess a stock’s profitability as a function of shareholders’ invested capital and a high current ratio (current assets divided by current liabilities) demonstrates that a company can easily service whatever debt obligations they might currently have.
1. Lucara Diamond Corp. (TSX: LUC)(LUCRF) – $3.09 CAD
Non-Gold Precious Metals & Minerals
Lucara Diamond Corp. is a diamond mining company focused on Africa. The Company’s primary segments are based on individual diamond properties, being the Karowe Mine and Corporate. The principal assets of the Company and the focus of the Company’s operations, development and exploration activities reside in Botswana. Its land holdings include Karowe Diamond License, Prospecting License No. 371/2014 and Prospecting License No. 367/2014.
- Market Cap: $1,178.09 million Canadian
- Current Ratio (FY0): 7.03
- Expected ROE (FY1): 40.8%
- EPS Reported (FY0, CAD): $0.28
2. Computer Modelling Group Ltd. (TSX: CMG)(CMDXF) – $9.23 CAD
Software
Computer Modelling Group Ltd. (CMG) is a Canada-based computer software technology company serving the oil and gas industry. The Company operates through the development and licensing of its reservoir simulation software segment. It is a supplier of process reservoir modelling software with a blue-chip customer base of international oil companies and technology centers in approximately 60 countries.
- Market Cap: $732 million Canadian
- Current Ratio (FY0): 2.34
- Expected ROE (FY1): 37.6%
- EPS Reported (FY0, CAD): $0.32
3. Intertape Polymer Group Inc. (TSX: ITP)(ITPOF) – $23.81 CAD
Non-Paper Containers & Packaging
Intertape Polymer Group Inc. is a Canada-based company, which operates in the specialty packaging industry in North America. It develops, manufactures and sells a range of paper and film-based pressure sensitive and water activated tapes, polyethylene and specialized polyolefin packaging films, woven coated fabrics and complementary packaging systems for industrial and retail use. Its products consist of carton sealing tapes, including pressure sensitive and water-activated tapes; industrial and performance specialty tapes, including masking, duct, electrical and reinforced filament tapes; shrink film; stretch wrap; lumber wrap, structure fabrics and geomembrane fabrics, and non-manufactured flexible intermediate bulk containers.
- Market Cap: $1,406 million Canadian
- Current Ratio (FY0): 2.45
- Expected ROE (FY1): 25.8%
- EPS Reported (FY0, CAD): $1.24
4. Evertz Technologies Ltd. (TSX: ET)(EVTZF) – $16.93 CAD
Communications & Networking
Evertz Technologies Limited is an equipment provider to the television broadcast telecommunications and media industries. The Company designs, manufactures and markets video and audio infrastructure equipment for the production, post-production and transmission of television content. Its solutions are purchased by content creators, broadcasters, specialty channels and television service providers to support their multi-channel digital and high definition television (HDTV) and high bandwidth low latency Internet Protocol (IP) network environments, and by telecommunications and new-media companies.
- Market Cap: $1,276 million Canadian
- Current Ratio (FY0): 5.36
- Expected ROE (FY1): 23.8%
- EPS Reported (FY0, CAD): $0.94
5. Pollard Banknote Ltd. (TSX: PBL)(PBKOF) – $8.10 CAD
Casinos & Gaming
Pollard Banknote Limited (Pollard) is a provider of products and services to the lottery and charitable gaming industries across the world. The Company produces and provides a line of instant tickets and lottery services, including licensed products, distribution, SureTrack lottery management system, retail telephone selling (telsell), marketing, iLottery, interactive gaming, Social Instants, retail management services and instant ticket vending machines. In addition, Pollard’s charitable gaming product line includes pull-tab (or breakopen) tickets, bingo paper, pull-tab vending machines and ancillary products, such as pull-tab counting machines.
- Market Cap: $191 million Canadian
- Current Ratio (FY0): 2.61
- Expected ROE (FY1): 21.5%
- EPS Reported (FY0, CAD): $0.32
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