Zacks Investment Ideas feature highlights: Hooker Furniture, Big Five Sporting
Goods and Tower International
CHICAGO, May 24, 2013
CHICAGO, May 24, 2013 /PRNewswire/ --Today, Zacks Investment Ideas feature
highlights Features: Hooker Furniture (Nasdaq:HOFT), Big Five Sporting Goods
Corporation (Nasdaq:BGFV) and Tower International (NYSE:TOWR).
3 Dreamy Small-Cap Stocks
Everyone knows the big cap stocks because everyone owns them. You know the
names: Apple, Google, Johnson & Johnson, McDonalds. I could go on and on. Some
of the large caps, like General Electric, have been around for over a hundred
There's nothing new or unknown about any of these companies. As an investor,
they make you feel safe. The large caps are like a trusty childhood blanket.
But small cap companies are different. There's an air of mystery about many of
them. They're usually not in the news much. Few analysts tend to cover them.
Most average people on the street have never heard of them. They seem scary
So why buy them?
Because the returns can be far greater on a fast growing small cap company
than a stodgy, slow growing big cap.
But you have to know where to look because not all small cap stocks are
created the same. Some companies aren't profitable. Some consistently miss
earnings estimates. Others aren't growing as quickly as they should be.
It's easy to get sucked into a small cap nightmare.
Finding the Best Small Cap Stocks
To reduce the risk, I came up with a list of criteria for my "dream" small
1. It must be a Zacks #1 Rank (Strong Buy)- which means that there is at least
one analyst covering the company and the estimates are likely rising.
2. It has to be profitable. Show me the money!
3. There must be double digit earnings growth forecast for 2013. If I'm going
to buy a small cap, I want to be able to cash in its explosive growth.
I then screened stocks using Zacks Research Wizard to find the best stocks
that matched my criteria. I had several dozen stocks to choose from but I also
wanted companies in different industries that also had good stories. Here's
what I found.
3 Dream Small Cap Stocks
oBig 5 Sporting Goods
1. Hooker Furniture (Nasdaq:HOFT)
Hooker Furniture makes wood furniture including home entertainment, home
office, accent, dining and bedroom furniture in the upper-medium price points
under the Hooker brand and in the moderate price point under the Envision
Lifestyle Collections brand. In business sine 1924, the Virginia-based company
has seen a lot of different business cycles.
The furniture industry is picking up momentum as housing picks up momentum. In
April, the company reported fiscal 2013 results which saw net income rise 71%
compared to fiscal 2012. The upholstery segment, for example, returned to
profitability in fiscal 2013 after reporting operating losses all the way back
to the second quarter of fiscal 2009. In the fiscal fourth quarter of 2013,
sales in the upholstery segment rose 10.4%.
The company has $26.3 million case on hand as of Feb 3, 2013, which is down
$15.7 million from a year ago due to an increase in inventories. Hooker is
making sure it has its best sellers in stock as momentum increases. More
impressively, the company had no long-term debt. $13.2 million was also still
available on its $15 million revolving credit facility with $1.8 million
reserved for standby letters of credit.
"We're encouraged by the sustained improvement in housing sales, new home
construction, rising housing prices, reduced housing inventories, historically
low mortgage rates and the best housing affordability in years. All of this
bodes well for our industry," said Paul B. Toms Jr., chairman and CEO in
Zacks Rank = #1 (Strong Buy)
Expected earnings growth for fiscal 2014 = 18.8%
Forward P/E =18.1
Market Cap = $184 million
The housing plays aren't a secret anymore. Hooker shares are trading near
2. Big Five Sporting Goods Corporation (Nasdaq:BGFV)
The consumer is alive and well in America. Big 5 Sporting Goods operates 414
stores in 12 western states that sell sporting goods and accessories including
athletic equipment for team sports, fitness, camping, hunting, fishing,
snowboarding and in-line skating.
On Apr 30, the company reported fiscal 2013 first quarter results and blew by
the Zacks Consensus by 62%. Same store sales jumped 10.5% even though they
were negatively affected by the Easter holiday, which was in Q2 last year. The
company shuts its stores on that day.
"We believe these results for the quarter reflect the ongoing enhancements to
our merchandise and marketing programs, the continued benefit from the
national increase in demand for firearms and ammunition products and more
favorable weather conditions in a majority of our markets versus the prior
year. Our positive sales trends have continued into the second quarter and we
feel well positioned to deliver strong results as we move through the spring
and into the summer season," said Steven G. Miller, Chairman, President and
CEO in April.
Zacks Rank = #1 (Strong Buy)
Expected earnings growth for fiscal 2013 = 77%
Forward P/E = 16.2
Market Cap = $450 million
As an added bonus, investors get a dividend which is currently yielding 1.9%.
It's unusual to see a small cap company pay a dividend, let alone one that is
3. Tower International (NYSE:TOWR)
The auto industry has staged a powerful rebound from its Great Recession lows.
Tower International has been able to cash in on the turnaround as it makes
body-structure stampings, frames and other chassis structures, as well as
welded assemblies for cars, crossovers, pickups and SUVs in 29 locations
around the world.
On May 2, the company blew away the Zacks Consensus Estimate for the first
quarter by 256%. Earnings were 32 cents compared to the consensus of just 9
cents. Revenue was up just 1% however as a struggling Europe saw lower
industry production. All other regions were higher in the quarter however.
It also completed an early debt tender and re-financing which is projected to
improve ongoing free cash flow by about 75 cents per share annually.
Tower raised full year guidance by 40 cents. As a result, 3 estimates have
Zacks Rank = #1 (Strong Buy)
Expected earnings growth for 2013: 52%
Forward P/E = 12.2
Market Cap = $399 million
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