It is difficult to find companies that are growing fast and that already pay a dividend in the small cap universe. I screened for and found three companies that could prove to be great bargains and that have these qualities.
How to find these stocks
The screen had the following criteria:
Component of the NYSE, NASDAQ, or AMEX
Market cap qualifying them as a small cap
Earnings per share growth over the past five years of 20% or greater per annum
Sales growth estimated for this fiscal year of 10% or greater
Companies that pay a dividend
Finding these stocks provides us with an opportunity to find companies that are growing fast. This may enable us to find stocks that will raise their dividends in the future, as well as potentially increase in price.
The candidates this screen produced include SCBT Financial Corporation (NASDAQ:SCBT), Barrett Business Services, Inc. (NASDAQ:BBSI), and United Financial Bancorp, Inc. (NASDAQ:UBNK). The following is a chart of the companies’ share price performance over the past year.
As the chart shows, the companies have performed well over the past year with Barrett Business Services leading the way with a whopping gain.
SCBT Financial – What you need to know
SCBT Financial Corporation (NASDAQ:SCBT) is trading near its 52-week highs. It has a dividend yield of 1.4%. The company expects full year earnings of $3.16 per share for its fiscal year ending in December 2013, up from $2.03 per share for fiscal 2012. For 2014, analysts expect full year earnings of $3.99 per share. With this growth, it is no surprise that the stock is trading near its 52-week high.
Its earnings in the last three quarters have fallen short of estimates, and earnings going forward were expected to be higher 90 days ago than they are now. Analysts are still expecting 12% annual growth per year on average over the next five years.
In looking at the company’s most recent 10-Q, it is noted that it manages about $5.1 billion in assets through its banking services as of March 31, 2013. In order for the company to continue growing, a successful integration of the recently acquired First Financial Holdings is key.
Managing interest rate fluctuations and diversifying risk with its loan portfolio are also factors of interest. In the most recent quarter (ending March 31, 2013), the provision for loan losses decreased $1.7 million compared to the same quarter a year ago. Net interest income increased in this period due to improved interest income on its acquired loan portfolio. Non-acquired non-performing assets also decreased in this period from about $81 million before to $76 million currently. A continuation of these positive factors can facilitate future growth if it can be achieved.
Barrett Business Services – Getting it done
The company is trading near its 52 week high of $62.82 per share. In the last four quarters, the company has beaten analyst estimates each time. Because of this, in addition to all analyst estimates for earnings per share in the coming quarters and for next fiscal year being upgraded over the past 90 days, it is not hard to see why the share price has been soaring.
The company has grown 57.27% per year over the past five years on average, and is expected to grow 35% per year over the next five years. The current dividend yield of the company is 0.8%, and is weighed down due to the massive surge in share price over the past year.
Barrett Business Services, Inc. (NASDAQ:BBSI) is a leading provider of business management solutions. To look into the company’s financial details, I looked at the most recent 10-Q filed for the quarter ending in March 2013. The company has two major segments: professional employer services and staffing. Nearly 75% of its revenue comes from professional employer service fees, and this segment grew in the quarter compared to last year by a whopping 38.35%.
