Growthing Small Caps Stocks For 2012

Early-stage companies spend many years planning for the day when everything clicks. For a number of them, 2012 could be the year when all their hard work pays off. So I decided to look at companies set to see sales rise more than 200% next year.
Most of the companies in the table below each already sport market values of more than $400 million, so they're no mere wallflowers. Clearly, they already hold great promise for some investors. If they can actually deliver on the strong growth expected of them, shares may surge.

Stay away from these stocks...
Of course, you should take some of these forecasts with a grain of salt. Alimera Sciences (Nasdaq: ALIM) has a promising device (an insertable tube that delivers steroids directly into the eye for those suffering from diabetes-related blindness), but the Food and Drug Administration (FDA) has been dragging its feet on approval.

Some think the company's product, Illuvien, may never get the green light and those lofty sales forecasts will never come to fruition. Still others think Illuvien will be approved and see annual sales approach $300 million in coming years. If that happens, shares would likely double or triple from today's levels.
Growthing Small Caps Stocks For 2012: Tesla Motors (Nasdaq: TSLA)
In a similar vein, Tesla Motors (Nasdaq: TSLA) will have to sell a lot of cars in 2012 to meet expectations of scorching sales growth. Yet competition in the electric car market is getting awfully crowded. Privately-held Fisker Automotive is aiming directly for Tesla at the high end of the market with a new model to be released this month, and firms such as Porsche, BMW and Mercedes-Benz are ramping up electric offerings in coming years as well. I'm in the camp that feels Tesla will be unable to sell enough cars to become profitable.
And legal wrangling may impede sales growth in 2011 for SIGA Technologies (Nasdaq: SIGA), which as I recently noted, may be forced to share a large government contract with Pharmathene (NYSE: PIP).
Consider these stocks instead...
Yet a pair of companies in the health field clearly have the makings of robust growth in 2012 -- and beyond.
Little-known Pacific Biosciences (Nasdaq: PACB) has developed a technology platform that can rapidly sequence strands of DNA at a lower cost than rivals. That was the promise held by rival Illumina (Nasdaq: ILMN), which is now worth more than $8 billion, more than eight times the value placed on Pacific Biosciences. To be sure, Illumina spent the first half of the past decade falling short of sales forecasts before sales finally took off in recent years. So there's still a chance Pacific Biosciences struggles to meet aggressive growth expectations in the near-term.
Pacific Biosciences has secured pre-orders for $24 million worth of equipment and has a decent shot of hitting 2011 sales forecasts of $38 million. But to meet the 2012 sales forecast of $139 million, the sales force needs to start moving at a more rapid clip. Longer-term, annual sales could exceed $500 million (rival Illumina had $666 million in sales last year), at which point, per-share profits could exceed $3 or $4 and shares would be twice as high as they are now. When that happens, though, is an open question.
Growthing Small Caps Stocks For 2012: Savient Pharma (Nasdaq: SVNT)
In a similar vein, Savient Pharma (Nasdaq: SVNT) may be looking at a very large market opportunity with its gout drug, Krystexxa, which helps alleviate gout-related pain and inflammation in patients who don't respond to other forms of treatment. Savient would have preferred to be acquired. When the company announced in late October that no takers were found, shares quickly plunged from $21 to $12 and now sit around $10.
Yet it's too soon to write Savient off. The company's team of 60 sales people just started selling Krystexxa at the end of February, and investors will start to more clearly see the drug's demand in coming quarters.
The real promise for Savient lays in the nature of gout. Cases of the arthritic condition have been rising quickly, particularly among U.S. males, likely due to a corresponding increase in the current spikes in diabetes and obesity in America. Once a patient starts suffering from gout, the disease can wield painful, but short-lived episodes. However, gout attacks have a tendency to become more frequent and painful with time and it is considered to be an irreversible condition once it reaches later stages.
Savient's Krystexxa has proven more effective in treating extreme gout pain than any other drug on the market, leading analysts at Global Hunter Securities to predict annual sales may eventually exceed $500 million. (As a note of caution, there are other promising gout treatments undergoing clinical testing, and if they reach the market, Krystexxa's potential opportunity would shrink.)
Savient is unlikely to be profitable before 2013, so patience will be required. Then again, the company still may end up in the hands of a suitor long before then and deliver big share price gains in the process.

6 Software Penny Stocks to Buy in 2012

There is no better place to find explosive growth than with low-priced penny stocks. I’m not talking about pink sheet stocks that are potentially nonexistent, or fraudulent names set to crash. I’m talking about real companies with real earnings — companies listed for more than one year on a major exchange like the AMEX, NYSE or Nasdaq, and that have a market cap in the ballpark of $100 million.

The returns can be even more powerful when you combine the power of technology stocks and penny stocks. Specifically, the software space is seeing lots of action thanks to the mass acceptance of smart phones and personal computing devices.

These devices are quite powerful, but they still need programs to make them run. The best software companies are those that make users more productive. In this tough economy, those companies that help workers do more with less are poised to be the penny stocks that really move higher.

Because these companies have the wind at their sails from an earnings perspective, these penny stock prices will not last long. Now is the time to pounce before the rest of the market catches on.

Here are six software penny stocks to buy now:
NetSol

6 Software Penny Stocks to Buy in 2012 - NetSol Technologies (NASDAQ:NTWK) is a penny stock with a near $100 million market cap. This is a real company with real products and real revenues. The company makes application software for the automobile finance and leasing industry as well as the banking, financial services and healthcare industries globally.

Shares have drifted lower since peaking near $2.40 per share earlier this year. You can buy this penny stock today for just $1.60 per share. That is a bargain that you should exploit.

NetSol beat estimates in the last quarter by 4 cents per share. Look for a similar result when it announces quarterly results. For the full year, the expectation is for a profit of 18 cents per share. If the company does better than expected, this stock could really take off.
Cover-All

The penny stock Cover-All Technologies (AMEX:COVR) has a market cap of $63 million and is part of the Russell micro cap index. In May, the stock was listed on the AMEX exchange taking shares off bulletin board status. The stock has gained about 50cents per share since that time.

Cover-All Technologies is in the business of providing software products and services for the property and casualty insurance space. That sector has been getting headlines this year with the uptick in natural disasters and inclement weather. Any chance to save money with technology will be more likely to be advanced under more difficult financial times.

Cover-All is profitable and expected to make seventeen cents per share in the current fiscal year. That number jumps 3 cents to 20 cents per share in 2012. The company has beaten estimates in the last two quarters. You can buy that 17% growth for less than 15 times estimated earnings.
Top Image

One of the problems owning penny stocks is trading volume is thin and liquidity makes it tough to sell shares for a profit. In the case of Top Image Systems (NASDAQ:TISA), we have a stock that sees an average of 300,000 shares trading hands each day. Clearly this stock will be followed by a fairly large group of investors.

Top Image system is in the business of making software with respect to data capture and manipulation. This Israeli-based company was founded in 1991. Shares of the company blasted higher in early May after the company reported positive results for its first quarter of 2011.

In the period, the company saw a 36% increase in revenue and posted a profit of seven cents per share as opposed to a loss in the year prior. That was enough to move the stock from $1.34 per share to $2.20 per share. Those are the types of moves you can expect from a penny stock when it delivers solid operating performance. I expect a repeat performance in future quarters.
Authentidate

6 Software Penny Stocks to Buy in 2012 -Authentidate Holding Corp. (NASDAQ:ADAT) is in the business of making the health care industry less paper-intensive. Offering web-based solutions for health systems and physician groups, this penny stock has nearly doubled in value since early April.

I don’t think the gains are done there. This sort of momentum is what I like to see. Historically riding these waves of momentum has been very lucrative to me and my investors.

Authentidate is growing and continually adding to its impressive roster of customers. Most recently the company signed a deal with the Department of Veteran Affairs to provide telehealth solutions. The company is expected to lose money in 2011, but to be profitable in 2012. If so, the stock will double again from here.
Cinedigm Digital Cinema

Penny stocks can be quite volatile. 6 Software Penny Stocks to Buy in 2012 -Shares of Cinedigm Digital Cinema (NASDAQ:CIDM) have been on a roller coaster this year. In mid-March the stock caught fire and jumped a dollar per share over the course of a couple of months. Since that time, shares have given up half that gain to the ballpark of $1.90 per share.

Use the selling to get in on this penny stock ride. Cinedigm provides technology solutions and digital content to theater exhibitors. The company just completed a year of operating losses that it expects to sharply narrow in the 2012 fiscal year. Sales are growing rapidly and that is what investors should focus on today.

To the extent they beat expectations, profitability may arrive sooner than later.
Mind CTI

6 Software Penny Stocks to Buy in 2012 -Mind CTI (NASDAQ:MNDO) is an Israeli-based technology company that provides convergent end-to-end billing and customer-care product-based solutions for service providers as well as telecom expense management solutions. After peaking at nearly $3.60 per share, the stock has slipped to current levels at $2.80 per share.

The move lower comes on the heels of a less-than-stellar quarterly earnings report for its first quarter ending March 31, 2011. Year over year revenue in the period was lower, but the company did post a profit of six cents per share. In addition to reporting a backlog to be recognized this year of $10.2 million Mind CTI had previously declared a cash dividend of 32 cents per share.

With telecom and wireless being all the rage around the globe, I expect Mind CTI to perform quite well for the remainder of the year.

3 Forgotten Stocks Worth Reconnecting With in 2012

It’s always worth a look when a one-time growth stock falls into value territory, and the market volatility of the past year has left its share of former high-fliers stranded well below their recent highs. Three such stocks are Monsanto (NYSE:MON), Teva Pharmaceuticals (NASDAQ:TEVA) and Ericsson (NASDAQ:ERIC). Once favorites of the press and institutional money managers alike, these stocks have quietly maintained steady fundamentals even as their valuations have come down. This disconnect presents an opportunity for longer-term investors.
3 Forgotten Stocks Worth Reconnecting With in 2012 - Monsanto

Monsanto is a case in point. The stock of this global agribusiness giant delivered a 22-bagger for investors from mid-2002 through mid-2008 — a period that saw its P/E surge from the mid-teens into the 50s. During this interval, the market became enamored with the “story” of the company capitalizing on rising global agricultural production through its genetically enhanced seeds. But Monsanto’s market value has been cut in half since its 2008 heyday thanks to rising competition, price pressures and slowing sales for its signature Roundup product. The result: a stock whose valuation no longer captures its earnings power.


According to the USDA, the average net cash income for U.S.-based farm businesses rose 17% in 2011 and is on track for another increase for 2012. Notably, the latest survey of farmer confidence showed continued strength, which obviously is a positive for suppliers such as Monsanto. The company has a strong product pipeline — including drought-tolerant corn, expected to launch in 2013 — that provides a solid foundation for earnings in the years ahead. It also should be noted that Monsanto, whose products help boost crop yields, still is in a prime position to benefit from the long-term imbalance created by the rising demand for agricultural products and the static supply of arable land. As a kicker, the stock yields a 1.7% dividend.

Despite these positives, the stock is trading at a discount to its five-year averages for all key valuation measures: P/E, price-to-book, price-to-sales and PEG. The chart also is potentially favorable with the possibility of a breakout if the stock rises above $77. Monsanto reports earnings Thursday.
3 Forgotten Stocks Worth Reconnecting With in 2012 - Teva Pharmaceuticals

Israel-based Teva, the world’s largest maker of generic drugs, rewarded investors with a total return of over 1,000% from 1999-2009. The stock has been left in the dust in the past two years, however — from its April 2010 high near $65, Teva is off nearly 40% even as the broader pharmaceutical sector has gained ground. Teva has been hit by concerns about rising competition and the potential loss of exclusivity on a key drug, but the stock is beginning to look like a value at these levels.


The IMS Institute for Health Care Infomatics is calling for the market share of branded drugs (which stood at 70% in 2005) to drop from 64% in 2010 to 53% in 2015 as the use of generics increases. In addition, a number of brand-name drugs are losing exclusivity in 2012, to the tune of a total sales volume of $28 billion. Both of these trends work in Teva’s favor.

Although Teva is a profitable company with important long-term trends working in its favor — analysts are looking for 13% EPS growth in 2012 — the stock has been left for dead. Among the numbers investors should take into account: The trailing P/E, at 12, is less than half the five-year average of 24.6. (The forward P/E is even more attractive at 7.2.) Price-to-book stands at 1.6 versus the five-year average of 2.4, while price-to-sales is at 2.1 versus 3.3. What’s more, Teva yields 1.7%, and management recently announced a buyback program worth $3 billion. With numbers like these, it looks like it finally might be time for this fallen angel to start playing catchup with its industry peers.

3 Forgotten Stocks Worth Reconnecting With in 2012 -  Ericsson

By now, the broadband theme is well-known: Rising smartphone and tablet usage is creating a surge in demand for broadband capacity, and telecom operators’ ability to meet this fast-growing capacity is limited. But what seems to have been lost on investors is that Ericsson — the market-share leader in providing the equipment and services that will help operators meet demand in the years ahead — still is one of the companies that is positioned to capitalize on this trend.


Nevertheless, the growth-stock darling of the 1990s now is a value play, with a forward P/E of 10.8 (and 8.6 net of cash), a trailing price-to-sales ratio of 0.98 (versus a five-year average of 1.3%), $6.7 billion in cash and a dividend yield of 3.6%. The stock was off 11% in 2011.

It might require patience for the market to pick up on the potential value here, but a look at the total picture reveals meaningful upside potential and limited downside risk from this level.

The bottom line: All three of these somewhat-forgotten market leaders have the potential to provide market-beating returns in the year ahead, even if the broader investment environment remains challenging.