This article is part of ourRising Star Portfolios series.
Over the next couple of days, I'll be gathering more small- and mid-cap candidates for my Rising Star "multivitamin" portfolio using my Foolish 8 and modified Foolish 8 screens. Today I present the Foolish 8, which was developed by Motley Fool co-founder David Gardner to identify profitable, rapid-growth, small-cap stocks. Here are the eight criteria:
Revenues: $500 million or less.
Earnings and sales growth: 25% or greater.
Net profit margin: 7% or greater.
Daily dollar volume: $1 million to $25 million.
Insider holdings: 10% or greater.
Share price: $7 or greater.
Relative strength: 90 or greater.
Operating cash flow: a positive number.
Eleven companies passed the screen this month:
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Cohen & Steers
CVD Equipment (NAS: CVV)
Exlservice Holdings (NAS: EXLS)
Portfolio management services
Gulfport Energy (NAS: GPOR)
Oil and gas
Interactive Intelligence (Nasdaq: ININ )
IPG Photonics (Nasdaq: IPGP )
Preformed Line Products (NAS: PLPC)
Transcend Services (NAS: TRCR)
Source: Capital IQ, a division of Standard & Poor's.
New stocks on the list this month are Cohen & Steers, CVD Equipment, Exlservice Holdings, Financial Engines, Preformed Line Products, and Transcend Services.
Dropping off the list from last month were 3-D Systems and Acme Packet.
Here's a look at some interesting metrics for these small fries:
Cohen & Steers
Preformed Line Products
Source: Capital IQ, a division of Standard & Poor's. P/E = price-to-earnings ratio; EV = enterprise value; FCF = free cash flow; TTM = trailing 12 months; ROE = return on equity. NM = not meaningful because of negative free cash flow.
If any of these companies look interesting enough for me to research further, I'll delve more into the reasoning behind the negative FCF.
Tomorrow, I'll show you the results of this month's modified Foolish 8 screen and then talk about the companies that interest me from both screens in more depth.
If you're interested in keeping up with any of these companies, add them to your free watchlist by clicking the "add" button in the far-right column of the top table. You can also follow me on Twitter and check out the multivitamin discussion board. Until tomorrow!
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At the time thisarticle was published Fool analyst Rex Moore reminds you that time always holds the winning hand. He owns no companies mentioned here. The Motley Fool owns shares of IPG Photonics and 3-D Systems.Motley Fool newsletter serviceshave recommended buying shares of Acme Packet, IPG Photonics, and Interactive Intelligence Group. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.
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