DICE HOLDINGS, INC. (DHX), CAI International Inc (CAP), ITT Educational Services, Inc. (ESI): 3 Highly Profitable Small Cap Stocks

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Finding small cap stocks that have strong earnings and that have grown significantly over the past five years can potentially uncover winners for the long-term.  These stocks provide exciting opportunities that could uncover some hidden gems.

DICE HOLDINGS, INC. (NYSE:DHX)How to Find These Stocks

  • Small cap stock
  • Listed on the NYSE or NASDAQ or AMEX
  • EBITDA margin TTM of greater than or equal to 30%
  • EPS growth over the last five years of greater than or equal to 20% per annum
  • A return on assets of greater than or equal to 5%

Three stocks that this screen produced are: DICE HOLDINGS, INC. (NYSE:DHX), CAI International Inc (NYSE:CAP) , and ITT Educational Services, Inc. (NYSE:ESI).

The following is a one year price chart for these companies so that we can compare their performance against that of the S&P 500 for the same time period.

^SPX data by YCharts

All About Dice Holdings

DICE HOLDINGS, INC. (NYSE:DHX) operates in the outsourcing and staffing industry. Hays plc (LON:HAS), Michael Page International plc (LON:MPI), and SThree Plc (LON:STHR) are its three largest competitors. Its success in competing depends on the company’s ability to outperform its competitors in landing key employee and employer information to be able to match recruiting needs.

In DICE HOLDINGS, INC. (NYSE:DHX)’s most recent 10-Q, there are key factors that will influence the company’s ability to increase its share price. The company provides specialized career websites. The company targets careers and niches that are hard for employers to find qualified personnel. The company’s ability to find these employees with rare skill sets and match them with prospective employers is an ongoing process that can prove to be lucrative if executed well.

Its three operating segments are tech and clearance, finance, and energy. Tech and clearance is the largest segment by revenue and it grew by 15.3% in the quarter ending in March of 2013 compared to March of 2012. Energy grew by 24% but is the smallest segment, partially offsetting the 13.9% decline in the finance segment.

If the company can stop the sales decline in the finance segment, and continue the momentum in the other two segments, look for it to do better in the coming quarters than the 9% total revenue growth that it just experienced. This can be accomplished by continuing to integrate the acquisition of Slashdot Media into the tech and clearance segment successfully.

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