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3 Fast-Growing Small Caps

Driven by high consumption and, to a lesser degree, by exports, the U.S. economy expanded 2.3% in full fiscal 2019, pushing the share prices of U.S.-listed stocks higher.

The U.S. small-caps market has benefitted from the growth if we consider that its benchmark, the Russell 2000, grew by nearly 10% over the last 12 months to close at a price of $1,656.78 on Friday, Feb. 7. The trailing 12-month earnings per share (EPS) without non-recurring items (NRI) has also grown for stocks in the Russell 2000.


Thus, investors may want to consider buying shares of those small caps that have grown their earnings per share substantially in recent years.

CSG Systems

The first company under consideration is CSG Systems International Inc (NASDAQ:CSGS), a Greenwood Village, Colorado-based provider of business support solutions to communications companies worldwide with a market capitalization of $1.65 billion.

CSG Systems grew its trailing twelve months EPS without NRI by 26.9%, which produced a 22% increase in the share price over the past year to $50.04 at close on Friday.

Regardless of its impressive growth, the share price still trades below the 200-, 100- and 50-day simple moving average lines.

The stock has a price-earnings ratio of 19.62 compared to the industry median of 25.99 and a price-book ratio of 4.15 compared to the industry median of 2.93.

As of February, three Wall Street sell-side analysts released recommendation ratings for this stock: one is a strong buy, one is a buy and the third one is a hold. The stock has a price target of $57 per share.

GuruFocus assigned a moderate financial strength rating of 5 out of 10 and a very high profitability rating of 9 out of 10 to the company.

On March 25, CSG Systems will pay a quarterly cash dividend of 23.5 cents per common share (which is up 5.4% from the previous distribution), generating a 1.88% forward dividend yield as of Friday.

Tennant Co

The second company under consideration is Tennant Co (NYSE:TNC), a Minneapolis, Minnesota-based designer, manufacturer and marketer of floor cleaning equipment worldwide with a market capitalization of $1.46 billion.

Tennant posted a 90.9% growth in its trailing 12-month EPS without NRI, leading the share price higher 31% in the past year to close at $79.83 on Friday, which is above the 200-, 100- and 50-day simple moving average lines.

The stock has a price-earnings ratio of 34.56 versus the industry median of 18.42 and a price-book ratio of 4.31 versus the industry median of 1.5.

This stock has an overweight recommendation rating from analysts and a price target of $86.33 per share.

GuruFocus assigned a moderate financial strength rating of 5 out of 10 and a very positive profitability rating of 7 out of 10 to the company.

Tennant Co currently pays a 22 cents quarterly cash dividend per common share, producing a 1.1% forward dividend yield as of Feb. 7.

US Physical Therapy Inc

The third company under consideration is US Physical Therapy Inc (NYSE:USPH), a Houston, Texas-based medical care facilities company with a market cap of $1.52 billion.

US Physical grew its trailing 12-month EPS without non-recurring items by 60.7%, determining an 11% rise in the share price over the past year to $118.7 at close on Friday, which is above the 50-day simple moving average line but still below the 200- and 100-day SMA lines.

The stock has a price-earnings ratio of 50.94 compared to the industry median of 25.73 and a price-book ratio of 6.44 versus the industry median of 2.59.

As of February, the stock has an overweight recommendation rating and an average target price of $122 per share.

GuruFocus assigned a positive financial strength rating of 6 out of 10 and a very high profitability rating of 9 out of 10 to the company.

US Physical Therapy currently pays a 30 cents quarterly cash dividend per common share, which generates a 1.01% forward dividend yield as of Friday.

Disclosure: I have no positions in any securities mentioned.

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This article first appeared on GuruFocus.