Sep 15 2009

3 High Growth Small Caps for 2009-2010.

Here are 3 small cap stocks that you probably haven’t heard of, but they each have at least a 25% increase in sales over last year – a time in which most companies have seen sales take a big hit.

K12.

Market Cap: $548 million
Estimated sales growth for current year: 26%

K12 (LRN) provides online high school courses for home schooled children. Almost half the states in the U.S. have approved their curriculum for use in online public schools. Enrollment for U.S. students is free, but foreign students pay to enroll. The stock currently trades at 30 times estimated 2009 earnings, but in this “Great Recession”, stocks with this kind of growth are rare.

Health Grades.

Market Cap: $133 million
Estimated sales growth for current year: 31%

Health Grades (HGRD) provides information on doctors, hospitals and nursing homes to patients. The information even contains ratings from past patients. Visitors to the company’s web site (HealthGrades.com) can access basic information in exchange for giving their own opinion of their doctor. More detailed reports can be purchased for around $13 and the company also receives fees from hospital marketing services. The majority of sales are currently to hospitals, although sales to patients is growing more rapidly.

Though the share price of Health Grades is up 80% this year, it trades around 20 times estimated 2009 earnings.

InterDigital

Market Cap: $937 million
Estimated sales growth for current year: 32%

InterDigital (IDCC) licenses high-speed data transfer technology to cell phone makers. They’ve had some legal disputes with Nokia, but analysts think things will be settled by a licensing deal with Nokia. InterDigital holds $6 per share in cash, and expects $3 per share in payments form Samsung. Shares are trading at 14 times estimated 2009 earnings.

Obviously, small cap aggressive growth stocks carry much more risk than large cap stocks and broad based index funds. But then, they also carry the potential for much higher return. Just do your research and know what you’re buying.


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