For the first time, 24/7 Wall St. features America’s Top 100 Small Businesses. To be considered, companies had to be publicly traded with more than $ 5 million and less than $ 1 billion in revenue. 24/7 Wall St.’s inaugural 100 Best Small Companies in America is made up of the best publicly traded companies in the United States, characterized by outsized revenue, growth and innovation. Data for the analysis was provided by S&P Capital IQ.
The initial list based on the universe of SOEs with sales of less than $ 1 billion. These companies are among the best for their size because they have increased their revenues over the period covered by our analysis. Due to their relatively small size and robust sales expansion rates, it is likely that many will continue to grow even further, if the record of public company expansion is one example. Past growth doesn’t mean all of these businesses will thrive, but most on this list have always been profitable, which increases the chances of future progress.
Our research shows that small businesses typically have one or two specialized divisions and focus on one primary market. For example, Steve Madden, True Religion, and 21 Street have all carved out a niche segment for themselves in the apparel and footwear market. Their lack of diversity could be a downside as companies rely entirely on a set of products, but it can also mean that management can be laser focused on a single opportunity.
Another industry well represented on this list is niche healthcare. Again, most of the companies in this industry that were on the list are only in one company. Mesa Labs manufactures quality control products for medical devices. This is a small market and there is no guarantee that a large device maker cannot attack the same industry. Bio-Reference Laboratories provides testing services. Cantel Medical provides infection prevention and control devices. This infection prevention business seems relatively small, but the medical industry as a whole in the United States is growing at such a rapid rate and regulations are changing so quickly that some of these businesses will thrive on these changes. Given the state of healthcare costs in the United States, few would be surprised to see healthcare companies on a list of fast growing companies.
These companies are also often willing to take calculated risks, in some cases, as they strive to expand their bases. Retailers are a good example. Steve Madden, one of our companies, was founded in 1990 with $ 1,100. The company has constantly added clothing lines since then to increase revenue
Another reason for creating this list is that 24/7 Wall St. recognizes that small businesses continue to be a mainstay of job growth. Successful businesses are roadmaps for the kind of industries, branches, and products and services that have been performing well recently. As recent access to capital has improved compared to access during the recession, well-targeted and well-managed small businesses have a much better chance of doing extremely well, as they can tap into pools of funding. . Methodology: We have ranked these companies largely on the basis of their growth rates as well as their financial performance in the recent past. The pace of these growth rates allowed us to make a final selection and rank the companies when the growth was combined with eight other categories. The 100 companies on our list have seen median sales growth of 20% and earnings per share growth of 30% over the past 12 months. Likewise, the median stock price return for the past year for this group was 16%, which is double the return of the S&P 500 Index over the same time period.
Although stock market performance is one of our ranking criteria, we did not remove companies for poor performance, as small companies tend to have larger price swings than the overall market. We must stress that this is not an investment list for value seekers. Maintaining these high growth rates is no easy task.
S&P Capital IQ has provided us with company information, financial data and rankings based on a series of metrics. We started with a universe of 1,200 publicly traded small businesses, which we defined as having revenues of $ 5 billion to $ 1 billion in the past 12 months. To narrow this group, we have required that sales growth, growth in earnings per share and return on equity be greater than zero for the last 12 months and for the last five years of the companies. We also excluded companies with a share price below $ 5, bringing the list size to 164.
The criteria we used to allow us to winnow the list to 100 companies based on a few things that included the share price. We then assigned a ranking based on all of the growth metrics and stock price returns above over one and five years. For companies whose shares have not traded for five years, we have used figures annualized from their first trade date. From these category rankings, each company was given an overall score which was used to produce the list.
The financial data below is from the latest available reporting period and the price change is as of March 21, 2012.