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Consider These 3 Fast-Growing Small Caps

Economists project that the U.S. economy has expanded at a 2.1% gain in its gross domestic product in the final quarter of 2019 that, if confirmed by the first estimate scheduled to release on Jan. 30, may keep on pushing share prices of U.S. stocks higher.

One of the markets that usually benefits the most from GDP growth is U.S. small-caps. The Russell 2000, which is the benchmark of this market, already saw its share price increase by 16.6% in the past year on the tailwind of higher GDP.


One major catalyst that will continue to move market valuations of small caps up is their trailing 12-month earnings per share (EPS) without non-recurring items (NRI). Investors may want to consider the following small caps as they are growing their profit via this metric at a 25% rate or more.

Comfort Systems USA

The first company under consideration is Comfort Systems USA Inc (NYSE:FIX), a Houston, Texas-based provider of mechanical installation, maintenance, reparation and replacement services for U.S. mechanical companies, which has a market capitalization of around $1.81 billion.

Comfort posted year over year trailing twelve months EPS without NRI growth of 104%, which produced a 3% increase in the share price over the past year to $49.46 at close on Friday, placing above the 200- and 100-day moving average lines.

The stock has a price-earnings ratio of 17.48 compared to the industry median of 13.22 and a price-book ratio of 3.25 versus the industry median of 1.11.

For the next five years, a catalyst to the share price is analysts' forecast of a 10% annual growth in earnings per share. Further, as of January, two sell-side analysts out of a total of five had a strong buy rating and three recommended a hold rating for this stock. The stock has a price target of $56.33 per share.

GuruFocus assigned a positive financial strength rating of 6 out of 10 and a very positive profitability rating of 7 out of 10 to the company.

Comfort Systems currently pays a quarterly cash dividend of 10 cents per common share, generating a 0.81% forward dividend yield as of Friday.

Carolina Financial

The second company under consideration is Carolina Financial Corporation (NASDAQ:CARO), a Charleston, South Carolina-based holding of CresCom Bank regional financial services company with a market capitalization of $948.06 million.

Carolina Financial Corporation posted a year over year EPS without NRI growth TTM of 31%, pushing the share price higher 27% in the past year to $42.62 at close on Friday, which is above the 200-, 100- and 50-day simple moving average lines.

This stock is predicted to hit a $43.22 price target per share within a year. Wall Street sell-side analysts have released five recommendation ratings in January, of which one is a strong buy, three are buys and one is to hold this stock.

The stock has a price-earnings ratio of 15.55 versus the industry median of 12 and a price-book ratio of 1.53 compared to the industry median of 1.07.

GuruFocus assigned a moderate financial strength rating of 4 out of 10 and a low profitability rating of 3 out of 10 to the company.

Carolina Financial Corporation currently pays a 10 cents quarterly cash dividend per common share, producing a 0.94% forward dividend yield as of Jan. 17.

Clarus Corporation

The third company under consideration is Clarus Corporation (NASDAQ:CLAR), a Salt Lake City, Utah-based global manufacturer and distributor of outdoor equipment and lifestyle products with a market cap of $408.75 million.

Clarus saw its EPS without non-recurring items turning from a loss of 2 cents to a net profit of 24 cents over the last 12 months. The share price rose 35% in the past year to $13.74 at close on Friday, which is above the 200-, 100- and 50-day simple moving average lines.

The stock has a price-earnings ratio of 41.64 versus the industry median of 19.87 and a price-book ratio of 2.42 versus the industry median of 1.55.

For the next five years, sell-side analysts forecast that Clarus Corporation will grow its earnings per share by an average of 10% every year.

Further, as of January, two sell-side analysts have issued a strong buy recommendation rating and one sell-side analyst has issued a hold recommendation rating.

GuruFocus assigned a very positive financial strength rating of 7 out of 10 and a moderate profitability rating of 4 out of 10 to the company.

Clarus Corporation currently pays a 2.5 cents quarterly cash dividend per common share, which generates a 0.73% 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.