7. Armstrong World Industries makes floors and ceilings used in the construction and renovation of residential, commercial and institutional buildings. Net sales for the second quarter of 2011 rose 3.3% from the first quarter to $748.6 million in the second quarter on improved pricing and a favorable product mix. Operating income for the second quarter increased to $72.7 million, vs. $52.9 million in the same quarter of 2010. Net income improved to $37.9 million from $26.8 million a year earlier. Net operating income and net income increased on the back of cost rationalization measures initiated in 2010 that resulted in lower manufacturing, selling and administrative costs in the present quarter. Armstrong projects new home starts at an annual rate of 600,000 in the U.S. and anticipates repair and remodel activity in North America to track 2010 levels. The average price target of analysts covering the stock is $51.40, about 28% greater than current levels. All of the analysts covering the stock give it a buy rating. Shares are trading with a price-to-earnings ratio of 13, based on 2012 earnings estimates.
Since this summer's market low, small-cap stocks have been outperforming large-cap stocks. Here are small caps with 'persistently strong top-line growth and improving fundamentals,' according to RBC Capital Markets.