I say this every year, but if you want stock ideas with good growth potential, you need to check out the annual Forbes best small companies list.
I try to go through the entire list each year and write about as many as possible.
For 3 years, I haven’t been able to finish it once, but now is another chance to redeem myself because the 2013 is out.
GrizzlyRock Value Partners was up 16.6% for the first quarter, compared to the S&P 500's 5.77% gain and the Russell 2000's 12.44% return. GrizzlyRock's long return was 22.3% gross, while its short return was -2.9% gross. Compared to the Russell 2000, the fund's long portfolio delivered alpha of 10.8%, while its short portfolio delivered alpha Read More
Forbes Stock Picking Methodology
The methodology used to pick the stocks that make the list is quite simple.
- annual revenue between $5 million and $1 billion
- stock price no lower than $5 a share
- excluded financial institutions, REITs, utilities and limited partnerships
- rankings are based on earnings growth, sales growth and return on equity in the past 12 months and over five years
- dropped thinly traded names and those with fuzzy accounting or major legal troubles
- factored in stock performance versus each company’s peer group during the last year as of Oct. 1
- financial data is pulled from Reuters
- fundamentals via FactSet
How did the stocks do?
The 2012 companies appreciated 32% on average. 3% better than the Russell 2000 (INDEXRUSSELL:RUT) index.
That’s impressive because it’s a list of 100 stocks. Not a concentrated list of just 10 stocks.
The 2013 List of Companies
An excel file with the 100 companies is provided at the bottom.
Fundamental data was compiled using the OSV stock analyzer.
Here are a few ideas you can try to narrow the stocks down further.
- Filter the stocks closest to its 52 week low – rather than analyze the ones that are already up 125% YTD like Questcor Pharmaceuticals Inc (NASDAQ:QCOR), start with the ones at the bottom of the barrel.
- Filter based on cheap fundamentals such as Pandora Media Inc (NYSE:P)/First Commonwealth Financial (NYSE:FCF)
- Go through the companies with zero debt
The Top 10 Forbes Best Small Companies
2013 Top 10 Forbes Best Small Companies
Download the Complete List of 100 Stocks
Click to download the excel file.
This post was first published at old school value.
You can read the original blog post here Find Winners with the 2013 Forbes Best Small Companies.