The momentum established by small-cap stocks in 2013 is supporting a continuation in the solid performance of small caps as 2014 unfolds. As expected, the Russell Index shows small caps to be outperforming large caps through the beginning of 2014.
The Russell Developed Europe Small Cap Index presents a January 2014 picture of 2X the growth of the Europe Large Cap Index, 4.2% against 2.1%. Likewise the Russell Global Small Cap Index exhibits in excess of twice the percentage of Global Large Cap growth, 2.5% against 1.2%.
Various small-cap equities are expected to offer continued substantial gain with lower risk than that associated with large-cap equities. The recommended small caps that led the 2013 market in high performance and continue in that strong upward trend in the current year, include Realogy (RLGY), WebMD (WBMD), Cepheid (CPHD) and Horace Mann Educators (HMN).
With subsidiaries at the top of the global real estate industry, Realogy experienced a phenomenal 21.2% rise in 2013 third-quarter earnings. The end product of that increase was $1.55 billion. Coldwell Banker, Sotheby’s International Realty, ERA, Coldwell Banker Commercial, Better homes and Gardens Real Estate, Century 21, Corcoran Group and CitiHabitats are its subsidiaries, with branches in over 100 countries. Realogy projects 2014 growth to be in the area of 17% to 19%.
The company is composed of four main departments: Relocation Services, Real Estate Franchise Services, Company Owned Real Estate Brokerage Services and Title and Settlement Services. RLGY provides lenders with a complete line of foreclosed home transactions as well as tending to every aspect of the buyer/seller real estate market, all within the brokerage services segment of the company. By the end of 2012, Realogy had 13,600 franchised offices spanning the entire world, with a total of 238,900 sales associates.
Previously known as Domus Holdings Corporation, in September 2012 the company acquired its current name Realogy Holdings Corporation. The 2013 net income of this entity was $320 million, an increase of $28 million over the net earnings in 2012.
As the economies of the developed regions such as Europe, Japan and the US continue to proceed in a pattern of healthy monetary growth, market analysts predict a 2014 global economic recovery. GDP increases lead to sharp and sustained surges in real estate sales. The perception of an ongoing worldwide economic recovery further enhances and maintains the rise in home sale closings.
The price of Realogy stock as of 02/26/2014 was $46.65 on a volume of 3.8 million, up $1.43 (3.1%) from the previous close of $45.22. The current earnings per share is $3.26.
As the parent company of three enormous entities, Realogy was a participant in 26% of the 2012 real estate firm transactions that took place around the world. The expectation is that this company is poised to continue its growth in 2014.
Resilience is the name of the game for WebMD Health Corporation. Following a downturn in 2012, WebMD reconstructed a winning format. The company diversified its sources of income, effectuated a major cost-cutting program and overhauled its advertising agenda. The 2013 result was a 144% rise in the stock price. Market analysts project a comparable 131% increase in 2014.
As of 02/26/2014, the price of WebMD was $45.49, up $0.33 from the previous close, on a volume of $1.39 million. In terms of income, the company continues to dig itself out from its 2012 devastation. WebMD expects to achieve a profitable outcome in 2014.
WebMD is an investment opportunity sailing forward on the tailwind of Obamacare. The health corporation is the access initiation for greater than five million members of the Blue Cross/Blue Shield Benefit Plan.
Revenue and per-share earnings both exceeded analyst projects. As to dividends, the expectation for fourth-quarter 2013 had been 18 cents per share; in reality the earnings totaled 23 to 25 cents a share. Sales are expected to reach $130 million to $133 million by the end of the first quarter 2014. The projection had been $128.7 million. The company revenue is running approximately 10% higher when compared to the previous year’s quarter.
FDA approval often brings with it the threshold of major profits. That approval was garnered by Cepheid in June 2013 in regard to its Xpert MRSA/SA BC test. This molecular diagnostic company developed its BC test for the purpose of detecting sepsis infections in hospital patients. Not surprisingly, the third-quarter 2013 earnings saw a year-over-year increase of 24%.
Cepheid is a $2.7 billion entity that has invented the GeneXpert platform. This system is the most-used program available in the molecular diagnostic field. The CPHD stock rose 25% during the second half of 2013. As of 02/26/2014, the price per share was $54.60, down $0.21 (-0.38%) from the previous close. The current recommendations for Cepheid Inc. at MSN MONEY includes a ‘Strong Buy’ as well as a ‘Hold’.
Horace Mann Educators Corp. (HMN).
This education-oriented insurance company has existed for 69 years. 2013 third-quarter assets totaled $8.5 billion, a rise of 4.9% over the same quarter of the previous year. Its clientele includes public grade-school staff throughout the U.S. A total of 3.8 million current and retired school administrators and teachers are covered by HMN. Almost half a million students in higher education are future teachers.
Horace Mann is the largest U.S. educators’ multiline insurance enterprise. Situated throughout the nation, 800 distribution centers provide annuities along with home, auto and life insurance.
While the expected growth of 14% over the next seven years is far from large, the stock of this profitable company carries a low risk. Horace Mann Educators is a recommended small-cap entity, as it is a relatively safe investment and lends itself well to the aim of portfolio diversification.
Investors profit from small-cap companies that follow a strong upward trend and have proven to be resilient, pro-active in the adaptation of industry advancements and diversified in their growth strategies. Such entities are the high-performance leaders in the market.