ETF Picks For 3 Of America’s Best Small Companies

ETF Database

Through the development of ETFs, investors are not only able to apply them as a great diversification tools, but these funds also grant access to niche markets and businesses often overlooked in large portfolios. Small businesses are typically included in ETFs seeking high growth potential and diversification, even though within the first five years, 50% of all new businesses fail, while others not only flourish but expand. Those looking for some direction into promising small businesses, Forbes’ “Best Small Companies in America” list is a great place to start [see also How To Pick The Right ETF Every Time].

These companies are selected based on a number of requirements, including having an annual revenue between $5 million and $1 billion, they need to have traded for more than a year, and boast a stock price above $5 a share. The highest ranked companies were selected based on earnings growth, sales growth, and return on equity over the last few years. Investors who are looking for great growth potential and aren’t afraid of a little risk should make sure to check out these three companies and the ETFs already invested in them:

SolarWinds, INC (SWI): Affordable IT Software

View photo

.

photodune-535754-analyzing-data-on-computer-xs

With data traffic expected to triple over the next five years, SolarWinds is first on Forbes’ Best Small Companies in America list, as this software company continues to chip away at sales to much larger competitors IBM and HP. By selling software for IT departments that are 80% of functionality but at a tenth of the price, this small firm many not be small for long as sales have grown 38% since 2006 to create a market cap of $233 million [see also High Tech ETFdb Portfolio].

For those looking to cash in on this technology firm, there is currently only one option for ETF investing, the Technology AlphaDEX Fund (FXL). This First Trust ETF has a higher than average expense ratio of 0.70% and SolarWinds only makes up for 2.42% of the portfolio, but with a three-year-return of almost 30% it seems the other companies it holds are also on their way up.

Questcor Pharmaceuticals, Inc (QCOR): Niche BioTech

This biopharmaceutical company has created products in its niche market of serious and hard-to-treat autoimmune and inflammatory disorders, where it leads the industry in research and developing medication for market. Its flagship product, H.P. Acthar Gel, is prescribed to treat infantile spasms (a rare form of epilepsy), multiple sclerosis (where the body damages its own spinal cord), and nephrotic syndrome (where the body damages its own kidneys) [see also ETF Picks For 3 Of The World's Most Innovative Companies].

Currently, there are four exchange-traded products that offer exposure to Questcor, but none offer very high exposure, with the S&P Small-Cap 600 Growth ETF (VIOG) giving the most weighting of them all, 1.28%. The S&P Small-Cap 600 ETF (VIOO) also holds Questcor, but it makes up less than 1% of the fund. Both the Russeell 2000 Growth ETF (VTWG) and Russell 2000 ETF (VTWO) also hold this pharmaceutical firm, but a lot of interest has dried up after healthcare provider Aetna decided to limit its reimbursement of Acthar Gel.

Cirrus Logic, Inc (CRUS): Semiconductor Kings

This small semiconductor group has obtained over 1000 patents on over 700 products since its founding in 1981, and some pretty big clients, namely Apple, who accounted for 62% of sales last year. Their audio processors and converters can be found in smartphones, tablets, MP3s and other portable electronics, and their newest line of remote controlled LED lights are making waves in the industry. With fewer then 500 highly specialized employees, Cirrus has made almost $434 million in revenues and its deals with Apple should only help it grow more [see also Actionable Ideas for ETFs].

There are 10 ETFs with varying levels of exposure to Cirrus, but none with more weighting than the SPDR S&P Semiconductor ETF (XSD). This specialized technology fund allocates 2.78% of its total assets to Cirrus, while the S&P SmallCap Information Technology Portfolio (PSCT) is a close second with its 2.71% weighting. For a more diversified view of the small cap market that still has exposure to our growing semiconductor firm, investors could try the S&P Smallcap 600 Pure Growth (RZG) or SmallCap Earnings Fund (EES). Other ETFs with meaningful allocations to Cirrus include:

  • Small Cap Growth AlphaDEX Fund (FYC)
  • SDPR S&P 600 Small Cap Growth ETF (SLYG)
  • S&P SmallCap 600 Growth Index Fund (IJT)
  • SPDR S&P 600 Small Cap ETF (SLY)
  • Core S&P Small-Cap ETF (IJR)
  • Russell 2000 Growth (IWO)

[For more ETF analysis, make sure to sign up for our free ETF newsletter or try a free seven day trial to ETFdb Pro]

Disclosure: No positions at time of writing.

Click here to read the original article on ETFdb.com.

Related Posts:

Rates

View Comments (0)

Recommended for You

  • Tycoon buys 30 Rolls-Royces for Macau hotel

    A Hong Kong tycoon has placed the biggest ever order for Rolls-Royce cars, agreeing to buy 30 Phantoms to chauffeur guests at a luxury resort he's building in the global gambling capital of Macau. Stephen Hung's $20 million purchase surpasses the 14 Phantoms bought by Hong Kong's Peninsula Hotel in…

    Associated Press
  • Chase Credit Cards

    Choose from cards with travel rewards, cash back, low interest, and more. Learn More.

    AdChoicesCreditcards.chase.comSponsored
  • Tycoon's arrest sends shock wave through Russia

    Tycoon's arrest sends shock wave through Russia MOSCOW (AP) — The arrest of a Russian telecoms and oil tycoon has sent shock waves through the country's business community, with some fearing a return to the dark days of a decade ago, when the Kremlin asserted its power by imprisoning the country's…

    Associated Press
  • Before You Buy Alibaba, Check Out 4 Top China Stocks

    Before You Buy Alibaba, Check Out 4 Top China Stocks While investors gear up for Alibaba Group 's (BABA) hotly anticipated initial public offering, don't forget about other Chinese stocks that are worth keeping an eye on. Today's Young Guns Screen of

    Investor's Business Daily
  • Costco Stores in Canada to Stop Taking American Express

    “The credit card relationship between American Express and Costco Wholesale Canada will not be renewed when it expires” on Dec. 31, the company said today in an e-mail to Canadian customers. The message was attributed to Lorelle Gilpin, vice president of marketing and membership for Costco…

    Bloomberg
  • "The Retiree Next Door": How successful retirees stretch their savings

    "The Retiree Next Door": How successful retirees stretch their savingsBy the time she hit her late 40s, Toni Eugenia wasn’t sure she would ever be able to retire. Eugenia, 56, a pharmacy technician who lived in Houston, was nearly $200,000 in debt and

    Yahoo Finance
  • As Fed takes baby steps, Cramer's trick for profit

    In turn, Cramer says making money in the market, involves looking at the environment through the lens of the Fed. "The trick is to remember that they speak for the common person," Cramer said. "The Fed wants the common person to make money." With that backdrop always in mind, Cramer says it becomes…

    CNBC
  • CNBC Anchor Calls Out Fed-Hater Bill Fleckenstein In Startling Shouting Match

    CNBC Bill Fleckenstein of Fleckenstein Capital appeared on CNBC's Futures Now program on Tuesday. Futures Now host Jackie DeAngelis came out swinging, asking Fleckenstein right at the top if he was willing to admit that he had misunderstood monetary policy. Sounding taken aback, Fleckenstein…

    Business Insider
  • 1 Tip To Lose Belly Fat

    It's Hollywood's Hottest Diet And Gets Rid Of Stubborn Fat Areas Like Nothing Else.

    AdChoicesagoodcooksSponsored
  • Beanie Babies creator's sentence debated in court

    Beanie Babies creator's sentence debated in court CHICAGO (AP) — Federal prosecutors seeking to put the billionaire creator of Beanie Babies in prison for hiding millions in Swiss bank accounts told appellate court judges Wednesday that the toymaker's sentence of probation threatens to erode the…

    Associated Press
  • Apple to unveil new iPads, operating system on Oct. 21 : report

    The company plans to unveil the sixth generation of its iPad and the third edition of the iPad mini, as well as its operating system OS X Yosemite, which has undergone a complete visual overhaul, the Internet news website said. Trudy Muller, a spokeswoman for Apple, declined to comment. The iPad is…

    Reuters
  • Play

    Citi, Bank of America Offer Discounted Mortgages

    Citigroup and Bank of America will offer mortgages at discounted interest rates to help borrowers with low incomes or subprime credit. AnnaMaria Andriotis joins MoneyBeat. Photo: Getty.

    WSJ Live
  • Here's What Mark Cuban Wishes He Knew About Money In His 20s

    Cuban is the owner of the Dallas Mavericks basketball team. Billionaire investor and entrepreneur Mark Cuban is generous with his advice. When we asked him what he wishes he'd known about money in his 20s, he said:

    Business Insider
  • Gilead Stock Is Falling On These Drug Setbacks

    Gilead Stock Is Falling On These Drug Setbacks Gilead Sciences (GILD) shares are backsliding Wednesday on news that the patient drop-out rate for hepatitis C drug Sovaldi is quadruple that of clinical trials. In addition, the biotech's Phase 2 study results

    Investor's Business Daily
  • Margaritaville casino owners seek bankruptcy

    The owner of Biloxi's Margaritaville casino has filed for Chapter 11 bankruptcy protection Tuesday, only hours before a hearing where the landlord aimed to seize the property. The filing by MVB Holding LLC in U.S. Don Dornan, a lawyer for landlord Clay Point LLC, said the company had planned to ask…

    Associated Press
  • Norwich Information Security MS

    Online, accredited, top ranked. NSA Center of Academic Excellence. Recognized by the Department of Homeland Security. Download your free brochure!

    AdChoicesNorwich UniversitySponsored
  • Embraer to sell 50 E-175 jets to Republic in $2.1 billion deal

    Brazil's Embraer SA, the world's third largest commercial planemaker, said on Wednesday it booked a firm order from U.S. The deal, which will be included in Embraer's order book for the third quarter, is valued at $2.1 billion, the planemaker said in a securities filing. The planes will be operated…

    Reuters
  • SHOE COMPANY: Our CEO Just Disappeared And Most Of The Money Is Gone

    "and like that: he's gone." This is an actual headline from a company press release: "CEO and COO disappeared, most of the company's cash missing." (Via FastFT) In a statement, German-based shoe company Ultrasonic said its CFO,  Chi Kwong Clifford Chan, has been unable to reach the company's CEO,…

    Business Insider
  • Don't buy Alibaba stock: 'Dean of Valuation'

    Investors should steer clear of Alibaba , valuation expert Aswath Damodaran said Wednesday. On CNBC's " Fast Money ," Damodaran, a professor of finance at New York University's Stern School of Business, noted that he was looking at Alibaba stock from the perspective of a long-term investor, not a…

    CNBC
  • Play

    What the Fed Meeting Means for Bonds

    Janet Yellen & Co. are expected to hint at their timetable for raising interest rates. Here's how investors should prepare ahead of the meeting.

    WSJ Live
  • Billionaire Investor Says Chinese People Work Harder And Western Companies Could Face Deep Trouble After Alibaba IPO

    Michael Moritz, the chairman of VC firm Sequoia Capital, is a huge fan of Chinese internet companies and reiterated his enthusiasm for the Chinese market in an interview with The Wall Street Journal Wednesday. The billionaire investor described the Alibaba IPO as a “major landmark event” that is as…

    Business Insider
  • Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More

    Top Analyst Upgrades and Downgrades: AEP, BHP, GE, Incyte, 3M, Tyco, Under Armour and More Stocks were firm on Wednesday morning ahead of the FOMC meeting outcome. Tuesday’s rally may have sparked higher interest again, and investors are looking for bargains

    24/7 Wall St.
  • Master's Degree in Nursing

    CCNE accredited MS in nursing in as few as 18 months online. Learn more today!

    AdChoicesNorwich UniversitySponsored
  • 6 Things Debt Collectors Wish You Knew

    The work debt collectors do is not popular, and has become increasingly derided by those who don’t like what we do or simply don’t know the facts about debt collection. Too often, debt collection is painted with a broad brush to create a portrait that isn’t accurate, and doesn’t properly educate…

    Credit.com