12 Small-Cap Internationals Gaining Traction: Analysts

NEW YORK (TheStreet) -- Canadian Solar (CSIQ), LDK Solar (LDK), Perfect World (PWRD), Concord Medical Services Holdings (CCM), iSoftStone Holdings (ISS), AutoNavi Holdings (AMAP), ReneSola (SOL), China Lodging Group (HTHT), CNinsure (CISG), Ambow Education Holding (AMBO), HiSoft Technology International (HSFT) and Noah Holdings (NOAH) are expected to return up to 73%, based on their respective 12-month price targets.

Analysts expect these 12 small-cap stocks to outperform their peers and broader markets, based on their respective 12-month price targets. These small-caps have an upside potential of 20%-73%, with an average upside value of around 45% and average buy ratings of 78%.

These stocks have minimum market capitalization of $300 million and pan sectors such as financials, information technology, solar, health care, online gaming and hospitality.

The stocks are stacked by upside, great to greatest.

12. LDK Solar ( LDK) is a vertically integrated manufacturer of PV products and is the world's largest producer of multi-crystalline solar wafers.

LDK agreed to acquire a 70% share in Solar Power for around $33 million, in January, in a move that will benefit both parties. The partnership will fortify Solar Power's balance sheet and LDK will be able to leverage the development portfolio of the acquired company.

LDK management anticipates improved business performance for full-year 2011. It expects revenue in the range of $3.5 billion to $3.7 billion, wafer shipments of 2.7 gigawatts to 2.9 gigawatts, module shipments of 800 MW to 900 MW, and gross margin between 23.0% and 28.0% for 2011.

The stock delivered around 58% during the last one year. Analysts polled by Bloomberg are upbeat and expect the stock to deliver around 20% in a year's time. With 42% buy ratings, the stock is trading at 6.1 times its estimated 2011 earnings.

11. iSoftStone Holdings ( ISS) is an information technology services provider serving clients across verticals like technology, communications, banking, financial services and insurance, energy, transportation and the public sector.

Net revenue for fourth-quarter 2010 increased 39.3% year-over-year to $61.8 million, following organic growth from existing and new clients, both globally and in China. Net revenue from Chinese clients increased 26.5% year-over-year to $35 million in the quarter, while net revenue from global clients (U.S., Europe and Japan) rose 60.3% to $26.8 million during the same quarter.

For the fourth quarter, net revenue from IT services jumped 60.2% year-over-year to $44.1 million, while that from consulting and solutions rose 6.1% year-over-year to $14.6 million. Similarly, net revenue from BPO services grew 0.2%, to $3.1 million, during the same quarter.

Net revenue from its top five clients amounted to $27.8 million in the quarter, up from $21.5 million in the year-ago fourth quarter. The stock trades at 36.2 times its estimated 2011 earnings.

10. AutoNavi Holdings ( AMAP), through its subsidiaries, engages in providing digital map content, navigation and location-based solutions in China.

In fourth-quarter 2010, net revenue came in at $23 million, representing an increase of 46.7% year-over-year. Contribution from automotive navigation, which factors in about 73% toward total revenue, grew 52.5% year-over-year to $16.7 million. Revenue from other segments, like public sector/enterprise applications and wireless/Internet location-based solutions, grew 18.1% and 49.4%, respectively.

Gross margin for the fourth quarter stood at 65%, compared to 60.3% in the year-ago period. Operating margin was 29.2% in the fourth quarter of 2010, compared to 22.7% in the year-ago quarter.

Net Income increased 356% to $5.8 million. Congwu Cheng, AutoNavi's CEO, remarked, "We believe that strong growth in the middle and high-end car sales markets will continue to provide a stable and increasing source of revenue for our business." The stock is trading at 25.3 times its estimated 2011 earnings.

9. Perfect World ( PWRD) is an online game developer and operator in China.

Total revenue stood at $89.8 million in fourth-quarter 2010, down 2.5% year-over-year.

Looking ahead, CEO Michael Chi said, "In the fourth quarter, our hard work during the year began to take shape as we launched three new games as well as a number of expansion packs for our existing games. These new titles, including 'Forsaken World' and 'Empire of the Immortals,' have already generated excitement among gamers and built a strong user base. We are expecting to see much stronger revenue growth in the first quarter of 2011 as these new contents start to take effect on the revenue side."

The stock has analysts' buy ratings of 62% and is expected to deliver 28% in the next one year, and is trading at 8.7 times its estimated 2011 earnings.

8. Jinko Solar ( JKS) is a China-based vertically integrated solar power product manufacturer with low-cost operations.

For 2010 fourth quarter, total revenue stood at $267.7 million, up 156.9% year-over-year, exceeding the company's guidance of $210 million to $220 million. Gross margin was 28.5%, compared to 16.2% for the fourth quarter of 2009. Net income was $55.8 million, an increase of 41.9% sequentially and 340% year-over-year.

For the quarter, the company's solar product shipments were higher than initially guided, at 162.6 megawatts, representing a 20.6% sequential growth and 65.9% year-over-year growth.

Reviewing the company performance, CEO Kangping Chen said in a press statement, "Our successful IPO and follow-on offering significantly increased our brand awareness and helped us increase our market share, while strengthening our balance sheet and improving our bankability. Our dedicated sales and marketing teams, with new sales offices in Munich and San Francisco, established a number of long-term partnerships with leading global solar companies in Europe and North America while also capturing opportunities in fast-growing markets."

7. China Lodging Group ( HTHT) operates an economy hotel chain in China.

Net revenue increased 29.2% year-over-year during the latest fourth quarter and 38% for full-year 2010, while net income increased 76% year-over-year for the fourth quarter and 407% for full-year 2010.

The company opened 202 new hotels in 2010, bringing total count to 438. Management pegs the budget hotel chain's revenue guidance for full-year 2011 at 34%-38%.

The stock received 100% buy ratings from the 10 analysts covering it, based on consensus estimates of analysts polled by Bloomberg. Analysts are optimistic and expect the stock to deliver 41% gains in the next year. The company is trading at 31.8 times its estimated 2011 earnings.

6. HiSoft Technology International ( HSFT) is a provider of outsourced information technology and research and development services.

Net revenue for fourth-quarter 2010 grew 63% year-over-year to $42.5 million, while gross profit rose 64% year-over-year to $15.4 million, compared to the same period last year. Gross margin was up marginally to 36.1% for the fourth quarter, compared to 36% in the year-ago quarter.

The company acquired BeSure, a specialist in the SAP field, in the fourth quarter. BeSure is expected to complement the company's core service offerings and capture opportunities in China's enterprise application market.

The stock has 100% buy ratings and is likely to gain around 52% over the next year, according to analysts polled by Bloomberg. Currently, the stock is trading at 23.1 times its estimated 2011 earnings.

5. Noah Holdings ( NOAH) is associated with services focused on distributing wealth-management products to high-net-worth individuals in China.

For 2010 fourth quarter, net revenue was $14.0 million, representing an increase of 157.1% from $5.4 million during the year-ago quarter. Revenue for full-year 2010 was $37.9 million, an increase of 160% from 2009.

For the same quarter, operating margin was 43.4% compared to 39.2% in the prior-year quarter. Operating margin for full-year 2010 was 41.4%, compared to 32.1% for full-year 2009.

Net income for the 2010 fourth quarter was $4.2 million, an 88.9% year-over-year increase from $2.2 million in the same quarter of 2009. Analysts expect the stock to deliver 57% returns over the next year and the stock is trading at 34.7 times its estimated 2012 earnings.

4. Ambow Education Holding ( AMBO) is a provider of educational and career enhancement services.

Net revenue for the 2010 fourth quarter was $213 million, compared to $137 million for the third quarter of fiscal 2009. Operating income increased 77.5% to $40 million compared to the same quarter of fiscal 2009.

Operating margin for the fourth quarter came in at 18.8%, compared to 16.5% in the same period in fiscal 2009.

Net income for the 2010 fourth quarter was reported at $32.7 million, an increase of 56% year-over-year compared to the fourth quarter of fiscal 2009.

The company's CEO Jin Huang said in a press statement, "Ambow continues to expand across the country through its innovative intelligence systems and service platform, further establishing itself as a market leader and the preeminent provider of education- and career-enhancement services in China." The stock is trading at 12.7 times its estimated 2011 earnings.

3. Concord Medical Services Holdings ( CCM) operates the largest network of radiotherapy and diagnostic imaging centers in China.

The company, through its subsidiaries, has entered into an agreement to acquire 52% equity interest in Chang'An Hospital, a licensed, full-service private hospital, in a deal valued around $30 million.

The company added 11 centers during the third quarter of 2010, taking the total count to 111 across 41 cities in China, and has agreements to establish 27 new centers.

For third-quarter 2010, net revenue came in at $15.1 million, up 29.6% from the same period in 2009. Gross profit during the quarter was $10 million, a 20.2% increase from the corresponding period in 2009. Reported net income was $5 million, down 2.2% from the year-ago quarter. The stock is trading at 14.9 times its estimated 2011 earnings.

2. ReneSola ( SOL) is a China-based manufacturer of solar wafers and solar module products.

Net income came in at $61 million vs. a loss of $28.1 million in the same quarter last year. Net revenue during the 2010 fourth quarter was up 7.7% from the third quarter of 2010.

The company secured 20 long-term contracts in 2010, representing about 1.3 gigawatts of expected wafer sales in 2011. Total solar wafer and module shipments for full-year 2010 stood at a record 1.18 gigawatts.

Reviewing the financial results, CFO Julia Xu remarked, "Our net debt-to-equity ratio has been reduced to 33.8% in 2010 from 104.9% in 2009, positioning us well as we look to capture market share through capacity expansions. In addition to record revenues of $1.2 billion and record shipments of 1.2 GW, we achieved impressive gross and operating margins of 28.9% and 20.4%, respectively, for the full-year 2010."

1. CNinsure ( CISG) is China's leading independent insurance intermediary company.

For 2010 third quarter, net revenue was $68 million, an increase of 26% year-over-year, while net income increased 35% during the same period last year.

For full-year 2010, net revenue was $225 million, an increase of 29% year-over-year, while net income increased 40% from 2009.

Commenting on the business performance, Yinan Hu, chairman and CEO, stated, "During 2010, we continued our efforts to enhance our long-term competitiveness by further penetrating into the property and casualty and life insurance markets, and launching initiatives to explore the insurance brokerage, e-commerce insurance, wealth management and consumer credit brokerage businesses. Going forward, the life insurance business, which has become a key growth driver for CNinsure, benefiting from the strong market demand and growth potential, will remain a strategic focus for the company."

Analysts expect the stock to deliver 73% gains over the next year.

>>To see these stocks in action, visit the 12 Small-Cap Internationals Gaining Traction portfolio on Stockpickr.

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