Best Companies Under A Billion
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Forbes magazine just published an article about the best small, public companies in the U.S. right now. One of the criteria was for current revenue to be less than $1 billion. Included in the story is commentary from Jack Dorsey, founder of Twitter and Square, about the essential challenges that exist for some of them today. You can read the online article here.
The print version of the story contains the full list of 50 and the on-line version has the top 25.
I'll look at five here.
The top company on the list is SolarWinds (NYSE: SWI). The 13-year old company is headquartered in Austin, TX, one of the fastest growing areas in the country. It provides various types of software products that allow its clients to monitor performance of their data storage, servers and networks. Their revenue of $233 million is more than three times higher than in 2007 and EPS has increased by an average of over 30% a year. The stock has increased by 140% so far this year. Can all of this growth be sustained? If the current trend in internet traffic continues, SWI could continue its upward trajectory.
The company that clocked in at number 4 was Cirrus Logic (NASDAQ: CRUS), the maker of mostly analog and mixed-signal (as opposed to digital) integrated circuits. It supplies mainly to audio and energy related businesses. In 2012, the company made $1.29 per share on revenue of $427 million. The EPS figure represented more than a 50% drop from 2011 levels. However, investors shrugged off the news and the stock has continued to gain. It has tripled over the last two years.
Ranked number 17 is Bio-Reference Laboratories (NASDAQ: BRLI). A provider of clinical health-care testing services, primarily in the NYC area that specializes in woman's health and oncology. Revenue is in the $637 million range and earnings have grown within that sweet spot of 20% to 25% over the past five years. And with no debt, positive free cash flow, and good management, the company seems to have all the key parts in place for success.
Next on the list at number 18 is Buffalo Wild Wings (NASDAQ: BWLD) which just snuck in with $910 million in revenue. The company operates and franchises a "two-in-one" type of restaurant appealing to both sports fans with large open seating and a multitude of large screen TV's available and families with a causal dining atmosphere and reasonable pricing. As the name implies it is famous for its "buffalo-style" spicy chicken wings. Earnings have increased in that mid-20% range that a growth investor likes to see. With a P/E in the 20's it is also a reasonably priced stock. Adding in zero debt sweetens the deal even more.
Number 26 on the list is Boston Beer (NYSE: SAM), the craft brewer and distributor of alcoholic beverages, including my personal favorite, Samuel Adams beer. The company's founder and chairman, Jim Koch, is a 6th generation brewer and is using his great-great-grandfather's lager recipe. Boston Beer also markets a custom made beer glass which heightens the distinctive taste of its products. The flagship brewery in Boston offers tours and provides samples at the conclusion.
Revenue is about $538 million. Although earnings declined a bit over the last year it still has averaged over 30% EPS growth a year for the past five. It has no debt, a P/E ratio below its historical value and lots of cash. Like the beer it might be time to buy SAM the stock.
So in conclusion I don't think you could do wrong with any of the members of the top 50 small companies. Take a close look at the five that I mentioned above.
Mathman6577 has no positions in the stocks mentioned above. The Motley Fool owns shares of Bio-Reference Laboratories, Buffalo Wild Wings, Cirrus Logic, and Boston Beer. Motley Fool newsletter services recommend Buffalo Wild Wings and Boston Beer. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.