Performance Of The Best Small Companies Updated: BRLI, IPGP, SYNA
Jae Jun | Jun 09, 2014 07:48AM ET
Because by the time you get to "B," you’re already burned out and probably sick of investing.
Buffett’s advice in theory is excellent.
But you can’t ask a man to run a marathon from day one.
Before you can even think about tackling every company from A-Z, there are steps, processes and small victories you need to accomplish before you can take on the monster.
That’s why the Forbes Best 100 Small Companies list and other stock ideas sites are wonderful places to get ideas and training yourself getting into the habit of going through lots of companies.
If you’re fairly new to old school value, here’s a rundown of what the Forbes stocks are.
Here’s what I wrote back in Oct 2013 when the 2013 list came out.
h3 Forbes Stock Picking Methodology/h3- 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
The reason I always tell people that this is a good list to start with is because the people at Forbes did a lot of work for you.
Ranking stocks based on sales, ROE etc is easy.
But look at points 5 and 6.
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
They just saved you over 20 hours of work right there.
Performance of the Best Small Stocks
Although I keep repeating “small stocks,” all of these companies are liquid and large enough for regular investors to buy.
There are plenty of stocks in the billion dollar market cap range.
The small company on the list is RF Industries (NASDAQ:RFIL) at $41m market cap. But then again, I laid out a plan on how you buy illiquid stocks .
Getting back to the stats, out of 100 stocks, 57 are showing positive returns and 43 are negative.
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That’s a 57% winning percentage.
Not bad.
Here’s a look at the top and bottom 10.
The main takeaway I see from the top 10 and bottom 10 is that the rankings really don’t matter.
Only 2 of the top 10 are ranked higher than 10. And none of the stocks in the bottom 10 are lower than rank 90. Just goes to show that you need to do the work in filtering out the good and the bad.
Keep in mind that these results are based on only 9 months of performance. But seeing how the list is refreshed each year, if the majority of stocks are winning by October, then it’s another successful year for this stock list.
h3 3 of the Best Small Stocks to Check Out/h3
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