Acme United Corporation (ACU), Eastern Virginia Bankshares, Inc. (EVBS): These Small-Cap Stocks Offer Upside And Safety

Pzena Investment Management, Inc. (NYSE:PZN) is an investment manager catering to wealthy families and other institutions. It has the largest market cap at $85.4 million, and its share price, although the highest at about $7, buys the most market cap per dollar of the three. It has a forward P/E of 14 and a dividend yield of 1.7%. For the most recent quarter, revenue grew 5.4% and earnings were flat. Although Pzena Investment Management, Inc. (NYSE:PZN)’s gross profit margin was down from the previous year, it remains a very high 45.2%.

Top holders include Fine Capital, with nearly a quarter of a million shares, and Renaissance Technologies, with about 125,000 shares. Renaissance’s bet on PZN is interesting because it usually is heavily invested in large caps.

Risks to consider: Neither past performance nor insider or institutional investment is a guarantee of future success.

Action to Take –> Together, these three stocks are quite promising. Due to the heavier institutional investment, I give PZN a slight edge over ACU. EVBS still has a way to go to prove itself, but now that it’s free of the bailout program, it could really blossom.

P.S. — Investors’ expectations for small-cap stocks often stem from expectations of future growth — and if you’re interested in growth, you should read our latest report, “The 11 Most Shocking Investment Predictions For 2014.” You’ll find out about the tiny company that could kill the gasoline engine and the little-known soda company that could mean big trouble for Coca-Cola and Pepsi. Click here to find out more.

– Bristol Voss

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