Tags: stocks | investing | Barrons | outlook

Barron's: 10 Best Small- and Mid-Cap Stocks for 2016

Barron's: 10 Best Small- and Mid-Cap Stocks for 2016

By    |   Monday, 14 December 2015 08:21 AM

Stocks this year have been driven by gains among a handful of major companies that are performing better than small- and mid-sized firms. But that doesn’t mean investors should expect a repeat in 2016.

“As history has shown, time and again, the most popular stocks ultimately swing out of favor, giving the underperforming ones a chance to shine,” writes David Englander in Barron’s. “We culled our list from companies we’ve written about during the past 18 months, and though we’ve taken a stock-specific approach, some themes have emerged.”

Barron's: 10 Stock Picks for 2016
  1. Actuant (ATU): “Actuant has a strong balance sheet and an 8% free-cash-flow yield. RBC Capital Markets sees profit rising 30% in fiscal 2017, to $1.80 a share.”
  2. Carmike Cinemas (CKEC): “Carmike has a solid balance sheet and generates a lot of cash. More acquisitions could fuel growth. Also, if management initiates a stock buyback, investors might take that kindly.”
  3. Covanta Holding (CVA): “With the stock’s free-cash-flow yield at 10 percent on 2016 estimates, investors are getting a high-quality business at a cheap price. Over the next two years, more than $400 million in free cash flow is expected, securing its 6.6 percent dividend.”
  4. Energizer Holdings (ENR): “Battery use is in slow decline, so don’t expect much revenue growth. Still, free cash flow could ramp up, and that could be used to buy in shares.”
  5. Equity Commonwealth (EQC): Since becoming chairman, Sam Zell “has been reorganizing this REIT, targeting $2 billion to $3 billion in asset sales. The stock, recently at $27, could move up 20%, as the company racks up more property sales and uses the proceeds to pay down debt or buy back stock.”
  6. FMC (FMC): “Gabelli & Co. looks for roughly 30 percent earnings gains from 2015 estimates over the next two years. It sees FMC’s private market value at $55 a share in 2017.”
  7. HRG Group (HRG): “Mittleman Brothers, a large holder, puts net asset value at $18 a share, well above the $13 recent price.”
  8. Kearny Financial (KRNY): “At a recent $12.35, the shares fetch 1.1 times tangible book, well below peers, which trade for almost 1.5 times. Investing back in the business, and stock buybacks, could drive earnings-per-share growth over the next few years.”
  9. Oaktree Capital Group (OAK): “Oaktree has raised more than $20 billion and intends to bring in more. As it invests the proceeds, it will begin to realize management fees on the assets.”
  10. Tribune Media (TRCO): “Evercore ISI estimates net asset value at $67 a share, almost double the recent price of $35.”

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Stocks this year have been driven by gains among a handful of major companies that are performing better than small- and mid-sized firms. But that doesn't mean investors should expect a repeat in 2016.
stocks, investing, Barrons, outlook
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2015-21-14
Monday, 14 December 2015 08:21 AM
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