BOSTON (TheStreet) -- The Russell 2000, the closely followed U.S. small-cap benchmark, reached an all-time high Monday, passing a previous peak reached in 2007. While earnings at small-cap companies, typically defined as those with a market value of less than $3 billion, have impressed investors in 2011, the economy is showing signs of weakness. Still, the following five small-cap stocks have delivered enormous gains this year, rising between 82% and 126%. Here is a look at these high-flying red chips. Some may offer further upside.
5. TeleNav (TNAV) offers location-based services, including voice-guided navigation on mobile phones and automobiles. It offers its service through wireless telecom carriers, including Sprint (S) and AT&T (T). The company swung to an adjusted fiscal third-quarter profit of 11 cents a share, exceeding researchers' estimate for a 12 cent loss. Average monthly paid subscriptions increased 15%, sequentially, to more than 22 million. A switch in revenue recognition with partner Ford (F) allowed TeleNav to book $6.6 million of additional revenue during the quarter. Net sales increased 33% during the quarter, beating researchers' consensus expectation by an impressive 5.6%.
TeleNav is predicted to boost fiscal fourth-quarter sales 56%. Its stock has surged 88% in 2011, outpacing all U.S. indices. TeleNav has a market capitalization of roughly $574 million and is in the process of repurchasing $20 million of stock. Its balance sheet is pristine, with $211 million of cash and short-term investments and no long-term debt. Its quarterly gross margin, at 81%, and operating margin, at 31%, came in well-above industry averages. The stock trades at a book value multiple of 3.4, a sales multiple of 2.7 and a cash flow multiple of 10, reflecting respective peer discounts of 40%, 90%, and 56%. Around 56% of analysts in coverage rate TeleNav's stock "buy."
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