Sunday, April 27, 2014

"Here are a couple of Small Cap stocks you want to buy when things settle down a little in the market, (so not on Monday morning!). Myriad Genetics (MYGN) and Dorman Products (DORM)"

Dow Jones Industrial Average 16,361.46 (Down) Week ending 04-25-2014

At some point, the unrelenting pounding of the momentum stocks is going to slow up or stop. Dividends are nice, but you need that growth component in your portfolio to really have the great gains over time. I have picked two stocks here that will probably go down more before they go up, but they are the kind of stocks that you will need in your portfolio to produce the above average returns that you seek. 

Myriad Genetics Inc. , (Symbol MYGN, $38.8), is the first of the pair I am bringing to the table. When you go to buy, I would purchase this one first. MYGN has a PEG Ratio of 0.2772, so lots of growth per price of the stock and a Return on Equity (ROE) of 27.44%. 

It also has great Quick Ratio , (9.28 to 1) , and Current ratio , (6.75 to 1). 

Myriad is a major company with $613 Million in Revenues. Revenues have increased every year for the last 5 years and Wall Street loves revenue growth. The company's stock price has a 1 Year gain in the TTM , (Trailing twelve months of 41.52%.)

With a PE of just 16.28, MYGN is a BUY on any kind of pullback, maybe at $37. Earnings per share for 2014 is projected at $2.20 cents per share.  

The second choice when the time is right to purchase is:

 Dorman Products, (Symbol DORM, $57.12). 

This one is kind of a Ben Graham stock: just a "good old solid company" and is a maker of truck parts; not a very glamorous business. 
 But to put it in a different light,  this stock in Peter Lynch parlance has been a "4 Bagger" in the last 3 years going from a price of 15 to a price of 60.

The company had 2013 Revenues of $664.47 million dollars and has had revenue gains every year in the last 5 years. The 3 to 5 year earnings growth on the stock has been 33.2%.

Like Myriad, Dorman has great Current and Quick financial ratios. The Quick ratio is 4.58 to 1 and a Current Ratio of 4.714 to 1. Again, great financial condition.

The PEG Ratio on the stock is 1.76 and is a little high and the Return on Equity is 21.98%, so very good. The PE on the stock is currently 25.59.

The earnings per share is going from $2.20 per share in 2013 to $2.64 per share in 2014 and moving to $3.06 per share in 2015. (Are we really talking about 2015? Yikes!!).

There are currently 6 BUY recommendations on the DORM stock. I would wait until you could get this one on a dip for around $55.00 per share. 

Although storm clouds can be very pretty and photogenic, we will wait for some clear skies in the market before we purchase these two stocks, but we should definitely add them to our "Wish List" or "Tracking List" for future growth purchases.

Have a Sunny week and smile,


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