Three Small Cap Companies Doing Well and Doing Good
Of course, definitions of good and evil will likely vary from individual to individual. It is up to you to decide if you consider a company to be socially responsible.
Here are three companies with market capitalizations near or under $2 billion that have been doing well for shareholders financially, while doing enough good for society to be carried by socially responsible mutual funds:
Genomic Health (NASDAQ: GHDX): Shares of this cancer diagnosis product provider have risen more than 30% year to date vs around 7% for the S&P 500 index. The company helps physicians test if cancer patients will respond to chemotherapy. After market close on May 2nd, Genomic reported quarterly earnings per share of around 2 cents, outshining the consensus analyst estimate of a 3 cent quarterly loss per share.
Yesterday, shares of the company hit a new 52 week high of $34.02, placing its market capitalization around $1 billion. Potential investors might be worried that the company is overvalued, given its forward P/E ratio of around 190 and PEG ratio near 2.75. However, over the past six months, insiders have increased their aggregate stake by close to 6%, bringing their total stake to around 6.5% of the company. Is recent insider investment in Genomic Health a positive signal?
United Natural Foods (NASDAQ: UNFI): This distributor of natural foods, organic foods and specialty products has met or exceeded consensus analyst expectations for each of its previous four quarterly earnings releases. Perhaps this consistency has lead shares of United Natural Foods to increase more than 25% year to date.
United Natural Foods minimizes its environmental impact by distributing relatively environmentally friendly products, and increasing food transportation efficiency. This distributer currently has earnings per share near $1.59. Analysts expect the firm to report EPS of $1.91 for full-year fiscal 2012 and $2.18 for full-year fiscal 2013. This would represent potentially promising earnings growth. Contrastingly, analysts expect larger food distributer Sysco's (NYSE: SYY) earnings per share to remain relatively stagnant. Analysts expect Sysco's current earnings per share of $1.95 to become $1.93 for full-year fiscal 2012 and $2.00 for full-year fiscal 2013.
In addition, United Natural Foods has a forward P/E ratio of approximately 23.5 and a PEG ratio near 2.1. Sysco has a forward P/E ratio of around 14 and PEG ratio near 2.4. These measures do not offer a conclusion as to whether the United is overvalued relative to Sysco, but both firms have a relatively high PEG ratio. United Natural Foods is improving financially and minimizing its environmental impact, but its positive results may already be priced into its equity prices.
MicroStrategy (NASDAQ: MSTR): This provider of business intelligence software has successfully helped other businesses reduce wasteful resource allocation and secured profits for itself at the same time. By providing software that helps others understand their businesses, MicroStrategy allows them to better serve society. This business model has led shares of MicroStrategy to achieve returns of around 32% year to date.
The company has a PEG ratio of around 6.1 and a forward P/E ratio near 28.5. These figures may seem high in isolation, but they may actually seem low relative to comparable company Qlik Technologies (NASDAQ: QLIK), which has a forward P/E ratio close to 42 and a PEG ratio near 9.3. Currently, buyers of MicroStategy seem to be giving the company a generous valuation, perhaps because of its potentially high levels of long term growth. Over the past 90 days, analysts have raised estimates for MicroStrategy's full-year fiscal 2013 EPS from $4.54 to $4.95.
Disclosure: At the time of this writing, I did not own shares of any companies mentioned in this post.
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