10 Small-Caps Expected to Rise Up to 71%

BOSTON (TheStreet) -- The Russell 2000 small-cap benchmark has rallied 8.5% in September. If the economy strengthens, small-cap stocks are likely to outperform large-caps.

Investors who are piling into bonds could miss out on major upside if fear subsides. Here are 10 small-cap stocks predicted to rise at least 52% in the next 12 months, based on analysts' median targets. They have market values between $500 million and $1.5 billion, and are ordered by expected return.

10. P.H. Glatfelter ( GLT) makes and sells specialty papers and fiber-based products. Its second-quarter profit plummeted 99% to $100,000, or break-even per share, beating expectations for a $500,000 loss. Revenue increased 30% to $365 million. The operating margin turned positive. Glatfelter's stock trades at a trailing earnings multiple of 5.5, a forward earnings multiple of 9, a book value multiple of 1.1 and a cash flow multiple of 2.8 -- 83%, 64%, 21% and 59% discounts to paper products industry averages. Three out of four analysts rate it "buy."

9. MasTec ( MTZ) is a specialty contractor of utility and communications infrastructure. Second-quarter profit decreased 23% to $15 million, or 18 cents a share, as revenue gained 28% to $495 million. The operating margin extended from 6.3% to 6.6%. MasTec's stock sells for a forward earnings multiple of 8.8, a book value multiple of 1.4, a sales multiple of 0.4 and a cash flow multiple of 7.5 -- 44%, 24%, 21% and 55% discounts to construction and engineering peer averages. Of analysts covering MasTec's stock, 11, or 79%, rate it "buy" and three rank it "hold."

8. Volterra Semiconductor ( VLTR) designs analog and mixed-signal chips. Second-quarter profit rose eightfold to $9 million, or 34 cents a share, as revenue soared 77%. The operating margin stretched from 11% to 26%. Volterra's stock trades at a book value multiple of 4.3, a 22% discount to the semiconductor industry average. Its PEG ratio, a measure of value relative to predicted long-run growth, of 0.1 signals a 90% discount to estimated fair value. Of analysts following Volterra, 13, or 81%, advise purchasing its shares and three recommend holding them.

7. Chiquita Brands ( CQB) distributes bananas, produce and healthy snacks. Second-quarter profit ascended 6.4% to $95 million, or $2.06 a share, as revenue declined 3.8%. The operating margin narrowed from 11% to 7.9%. Chiquita's stock sells for a trailing earnings multiple of 9.1, a forward earnings multiple of 5.9, a book value multiple of 0.8 and a sales multiple of 0.2 -- 55%, 62%, 81% and 88% discounts to food products peer averages. Of analysts covering Chiquita, three advocate buying its stock and one advises holding it.

6. Veeco Instruments ( VECO) sells equipment used to make semiconductor, data-storage and wireless products. Veeco swung to a second-quarter profit of $52 million, or $1.20 a share, from a year-earlier loss. Revenue more than tripled to $253 million. The operating margin turned positive. Veeco's stock trades at a trailing earnings multiple of 15, a forward earnings multiple of 7.5, a book value multiple of 3.1 and a cash flow multiple of 9.1 -- 27%, 40%, 44% and 35% discounts to industry averages. Around 80% of analysts rate it "buy" and 20% rank it "hold."

5. Cedar Fair ( FUN) owns and operates amusement and water parks. It is structured as a limited partnership, paying quarterly cash distributions, which are taxed differently than dividends. Cedar Fair swung to a second-quarter loss of $4.2 million, or 8 cents a share, from a year-earlier profit. Revenue ascended 4.3%. Cedar Fair's stock sells for a forward earnings multiple of 9.2, a sales multiple of 0.7 and a cash flow multiple of 3.9 -- 63%, 73% and 70% discounts to industry averages. Of researchers following the stock, four rate it "buy" and one ranks it "hold."

4. Entegris ( ENTG) sells integrity-management products to semiconductor, fuel-cell and life-sciences companies. It swung to a second-quarter profit of $18 million, or 14 cents a share, from a year-earlier loss. Revenue more than doubled. The operating margin climbed from the negatives to positive 16%. The stock trades at a forward earnings multiple of 5.6, a book value multiple of 1.5 and a cash flow multiple of 8.4 -- 53%, 73% and 37% discounts to peer averages. Of analysts rating Entegris, seven advise purchasing its shares and one recommends holding them.

3. Penn Virginia ( PVA) is an independent onshore oil-and-gas explorer, with operations in East Texas, the Mid-Continent region and the Appalachian basin. Penn Virginia swung to a second-quarter profit of $31 million, but a per share loss of 46 cents. The operating margin remained negative. Penn Virginia's stock sells for a book value multiple of 0.7, a sales multiple of 1.3 and a cash flow multiple of 3.8 -- 83%, 27% and 47% discounts to oil and gas industry averages. Of researchers evaluating the stock, 10, or 83%, rate it "buy" and two rank it "hold."

2. Diodes ( DIOD) makes signal and switching chips for electronic devices. Diodes swung to a second-quarter profit of $17 million, or 37 cents a share, from a year earlier loss. Revenue grew 44%. The operating margin rose from 5.4% to 16%. Diodes shares trade at a forward earnings multiple of 9, a book value multiple of 1.5 and a cash flow multiple of 8.2 -- 28%, 72% and 41% discounts to peer averages. Its PEG ratio of 0.1 signals a 90% discount to fair value. Of analysts covering Diodes, 10, or 77%, advise purchasing its shares and three suggest holding them.

1. True Religion Apparel ( TRLG) sells denim and other apparel. Second-quarter profit dropped 31% to $7.5 million, or 30 cents a share, as revenue grew 14% to $7.5 million. The operating margin decreased from 25% to 20%. True Religion's stock sells for a forward earnings multiple of 8.4, a book value multiple of 2.4 and a cash flow multiple of 8.2 -- 51%, 36% and 43% discounts to industry averages. Of researchers following True Religion, five, or 83%, rate its stock "buy" and one ranks it "hold."

-- Written by Jake Lynch in Boston.

RELATED STORIES:


Become a fan of TheStreet on Facebook.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

More from How-to

How to Have Great Travel Adventures on Your Own

How to Have Great Travel Adventures on Your Own

How Much Do Accountants and CPAs Make?

How Much Do Accountants and CPAs Make?

AAP Exclusive: Cramer Says The President is No Longer on the Side of the Bulls

AAP Exclusive: Cramer Says The President is No Longer on the Side of the Bulls

How to Trade Stocks

How to Trade Stocks

How to Use Bitcoin for Purchases

How to Use Bitcoin for Purchases