The U.S. stock markets have been having a banner year.
And as big time companies hum along, small cap stocks — which tend to do better than the S&P 500 during good times and worse during bad times — have been singing even louder.
Small cap stocks have little exposure to foreign markets where growth has been slowing. Furthermore, they are less exposed to the negative effects of a strengthening dollar.
In a new report to clients, Deutsche Bank's David Bianco offers his firm's calls for the best mid and small cap stocks right now.
These buy-rated non-S&P 500 stocks have market caps greater than $800 million, price-earnings ratios less than 25, 2013 EPS growth rates greater than 8%, and net debt/market cap less than 30%.
Relative to Deutsche Bank's analysts' targets, these stocks offer return opportunities of 5% to 23%.
Allegiant Travel: 10% Upside
Ticker: ALGT
Industry: Airlines
Target Price: $110
Price Upside: 10%
Net Debt/Mkt Cap: -10%
'13 EPS Growth: +18%
Allegiant is a low-cost airline company based out of Nevada, with almost $950 million in revenue TTM.
Source: Deutsche Bank
Dick's Sporting Goods: 13% Upside
Ticker: DKS
Industry: Specialty Retail
Target Price: $57
Price Upside: 13%
Net Debt/Mkt Cap: -6%
'13 EPS Growth: +12%
Dick's Sporting Goods stores operate in 44 states, selling apparel, footwear, hunting and fishing gear, and fitness and golf equipment. The company has over 11,000 employees.
Source: Deutsche Bank
Embraer S/A: 10% Upside
Ticker: ERJ
Industry: Aerospace & Defense
Target Price: $41
Price Upside: 10%
Net Debt/Mkt Cap: +5%
'13 EPS Growth: +50%
Embraer sells aircrafts for civil and defense aviation across the world, and boasts $7 billion in market capitalization. Shares of Embraer are up over 30% year to date.
Source: Deutsche Bank
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