William Blair's 2014 Top Small-Cap Picks
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Price: $92.32 +2.08%
Rating Summary:
7 Buy, 2 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 17
Rating Summary:
7 Buy, 2 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 11 | Down: 18 | New: 17
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William Blair & Company put out its 2014 Small-Cap Top stock recommendations list, or those with market caps below $1.5 billion.
Below are some of the stocks on the list and some of their thinking about the stocks:
Huron Consulting (NASDAQ: HURN) - Demand for healthcare consulting should remain strong and we see potential for the e-discovery segment to rebound, particularly at the profit margin line.
C&J Energy Services (NASDAQ: CJES) - We believe the outlook for companies with North America-centric businesses is better than for those focused on deepwater equipment, and C&J is one of the most-exposed stocks to this thesis in our coverage.
Trulia, Inc. (NYSE: TRLA) - We believe that Trulia, following three consecutive quarters of record subscriber additions, will again have strong subscriber additions in 2014 as a result of “inventory expansion 2.0,” expected to begin in fourth quarter 2013 or early 2014. Throughout 2013, Trulia executed “inventory expansion 1.0,” successfully adding a second advertising slot to sold-out ZIP codes, which increased the inventory it could sell to agents and, in turn, its revenue.
RetailMeNot (NASDAQ: SALE) - RetailMeNot is addressing an estimated $6 billion market that is only 3% penetrated, presenting a significant revenue opportunity.
Globus Medical (NASDAQ: GMED) - Globus Medical is a pure-play on the global spine market
Imperva, Inc. (NASDAQ: IMPV) - We believe that Imperva is the leader in data center security (through Web application firewall and database monitoring solutions).
Ruckus Wireless (NASDAQ: RKUS) - We believe that the pace of service provider Wi-Fi spending is picking up and the adoption of the Hotspot 2.0 standard by device makers will be a catalyst to accelerate commercial deployments of Wi-Fi in mobile networks in 2014.
Hi-Crush Partners LP (NASDAQ: HCLP) - We believe the company is well positioned to benefit from the strong anticipated growth in horizontal drilling and fracking that characterize unconventional oil-and-gas basins and the growing amount of sand per well that can be used to maximize returns on invested capital for well operators and owners.
WNS (Holdings) Limited (NYSE: WNS) - WNS is a leading pure-play offshore BPO provider. Originally the British Airways captive, WNS now handles more than 600 processes for more than 200 clients globally. The company has more than 12,000 employees in six delivery centers, servicing large clients such as Aviva, Travelocity, and Marsh.
Emerge Energy Services LP (NASDAQ: EMES) - Emerge Energy Services is one of the country’s leading providers of high-quality Northern White frac sand, and we believe it is well positioned to benefit from the growth in the number of wells drilled in the United States, increasing well complexity and service intensity, longer well depths and laterals, and better data to increase recovery rates in both conventional and unconventional reservoirs
ITT Educational Services, Inc. (NYSE: ESI) - ITT offers mostly two-year degrees in areas like electronics, drafting, IT, and nursing. We believe ground-based vocational education faces significant capacity constraints at public colleges but fills a need in the U.S. workforce with the return of manufacturing growth and expansion of healthcare services, and believe ITT is nicely positioned to soak up students unable to graduate quickly enough or gain employment from public college competitors (mostly community colleges)
Gigamon Inc. (NASDAQ: GIMO) - Our positive view is based on Gigamon’s dominant position in the fast-growing and underpenetrated market for network visibility. As the strategic value of the network becomes more paramount, security, network automation, and analytics platforms are moving from a nice-to-have discretionary spending item to a strategic investment. Gigamon allows customers to increase return on investment for past monitoring tool purchases, defer investments in additional tools, and increase network-wide visibility.
Quidel Corporation (NASDAQ: QDEL) - We see Quidel’s pipeline as one of the best in diagnostics in terms of both breadth and depth. The pipeline spans multiple technologies (e.g., lateral flow, DFA, molecular) and markets (e.g., hospital/reference labs and doctor’s offices), and the early stages of that pipeline (namely Sofia) have already begun contributing to sales growth. Sofia system placements are the key driver of near-term revenue, and placements continue to track to 10,000 by 2015 with the broad menu enabling utilization.
eHealth, Inc. (NASDAQ: EHTH) - We believe that eHealth is one of the best pure-play investments on the Affordable Care Act (ACA) legislation, rising healthcare costs, and the retirement-age baby-boomer generation. With the company primed to take advantage of opportunities in both core health insurance markets, eHealth has the potential to increase EPS more than 40% per year from 2013 through 2015
Capella Education Company (NASDAQ: CPLA) - Capella is an innovative online education provider with virtually no policy exposure that recently returned to new enrollment growth and should see significant operating leverage once it returns to total enrollment growth in 2014.
BroadSoft, Inc. (NASDAQ: BSFT) - We believe that BroadSoft is the primary beneficiary of a secular shift in enterprises moving their noncore communications infrastructure assets to the cloud.
ICF International, Inc. (NASDAQ: ICFI) - We expect continued double-digit growth in the nonfederal part of the business, which is about 45% of revenue. The company’s commercial consulting business is well positioned to capitalize on its expertise in a variety of high-growth subsectors—energy efficiency, aviation, healthcare, digital interactive, and environmental risk mitigation
E2open, Inc. (NASDAQ: EOPN) - Up- and cross-sell. E2open has a large opportunity to up-sell its existing base of customers; the company is only about 20% penetrated in this group. With most customers having purchased roughly 2 applications/modules (out of about 12-15, depending on the industry), there is enough room for material growth simply by up-selling existing customers. In
addition, we believe that the company should be able to expand its product offering over the coming years through product acquisitions (such as the icon-scm purchase) and internal development, enabling it to garner even more wallet share from its customers. The company has also doubled its salesforce over the past two years and plans to continue to expand its salesforce in line with its targeted new and up-sold bookings growth (30%). In conjunction with this increase in sales personnel, E2open has increased the number of customers from the low 30s three years ago to more than 100 today, presenting a compelling captive base to up-sell into.
Marcus & Millichap, Inc. (NYSE: MMI) - Marcus & Millichap is the largest provider of commercial real estate services to a highly fragmented market, the private client segment. The private client segment accounts for more than 80% of all commercial real estate transactions, giving Marcus & Millichap a large amount of potential deal flow. The complexities around creating scale in such a fragmented market have forced many of the larger national brokerages to ignore the private client segment and allocate resources in the institutional market, giving Marcus & Millichap an opportunity to garner additional market share.
RE/MAX Holdings, Inc. (NYSE: RMAX) - Re/Max is a leading residential real estate franchise and boasts a network of more than 90,000 agents across 95 countries, with the majority of agents in the United States and Canada. Re/Max, in our opinion, is an attractive way to play the recovery in existing home sales for investors that prefer a business with more-predictable results. The franchise model means that revenues are largely dependent on agent count, not home sales. We estimate that more than two-thirds of Re/Max’s revenue is recurring in nature, which is driven by total agent count and related fees at the company’s franchises. Moreover, we expect that Re/Max’s unique value proposition of offering its agents an entrepreneurial culture, technology platforms and leads, and attractive commission splits will continue to resonate within the marketplace, thus enabling the company to grow at a faster pace than most would expect, as we anticipate Re/Max will be the beneficiary of retaining quality agents while attracting productive agent
MaxLinear, Inc. (NYSE: MXL) - MaxLinear is well positioned to benefit from secular growth drivers: the increasing need for smaller, more-power efficient tuners that deliver faster data speeds and new operator services
BioDelivery Sciences International (NASDAQ: BDSI) - We believe that 2014 should be transformative for BioDelivery Sciences. The launch of Bunavail by the company in mid-2014 for the treatment of opioid addiction should alone be a significant value-creating event and lead to upside from current levels
Below are some of the stocks on the list and some of their thinking about the stocks:
Huron Consulting (NASDAQ: HURN) - Demand for healthcare consulting should remain strong and we see potential for the e-discovery segment to rebound, particularly at the profit margin line.
C&J Energy Services (NASDAQ: CJES) - We believe the outlook for companies with North America-centric businesses is better than for those focused on deepwater equipment, and C&J is one of the most-exposed stocks to this thesis in our coverage.
Trulia, Inc. (NYSE: TRLA) - We believe that Trulia, following three consecutive quarters of record subscriber additions, will again have strong subscriber additions in 2014 as a result of “inventory expansion 2.0,” expected to begin in fourth quarter 2013 or early 2014. Throughout 2013, Trulia executed “inventory expansion 1.0,” successfully adding a second advertising slot to sold-out ZIP codes, which increased the inventory it could sell to agents and, in turn, its revenue.
RetailMeNot (NASDAQ: SALE) - RetailMeNot is addressing an estimated $6 billion market that is only 3% penetrated, presenting a significant revenue opportunity.
Globus Medical (NASDAQ: GMED) - Globus Medical is a pure-play on the global spine market
Imperva, Inc. (NASDAQ: IMPV) - We believe that Imperva is the leader in data center security (through Web application firewall and database monitoring solutions).
Ruckus Wireless (NASDAQ: RKUS) - We believe that the pace of service provider Wi-Fi spending is picking up and the adoption of the Hotspot 2.0 standard by device makers will be a catalyst to accelerate commercial deployments of Wi-Fi in mobile networks in 2014.
Hi-Crush Partners LP (NASDAQ: HCLP) - We believe the company is well positioned to benefit from the strong anticipated growth in horizontal drilling and fracking that characterize unconventional oil-and-gas basins and the growing amount of sand per well that can be used to maximize returns on invested capital for well operators and owners.
WNS (Holdings) Limited (NYSE: WNS) - WNS is a leading pure-play offshore BPO provider. Originally the British Airways captive, WNS now handles more than 600 processes for more than 200 clients globally. The company has more than 12,000 employees in six delivery centers, servicing large clients such as Aviva, Travelocity, and Marsh.
Emerge Energy Services LP (NASDAQ: EMES) - Emerge Energy Services is one of the country’s leading providers of high-quality Northern White frac sand, and we believe it is well positioned to benefit from the growth in the number of wells drilled in the United States, increasing well complexity and service intensity, longer well depths and laterals, and better data to increase recovery rates in both conventional and unconventional reservoirs
ITT Educational Services, Inc. (NYSE: ESI) - ITT offers mostly two-year degrees in areas like electronics, drafting, IT, and nursing. We believe ground-based vocational education faces significant capacity constraints at public colleges but fills a need in the U.S. workforce with the return of manufacturing growth and expansion of healthcare services, and believe ITT is nicely positioned to soak up students unable to graduate quickly enough or gain employment from public college competitors (mostly community colleges)
Gigamon Inc. (NASDAQ: GIMO) - Our positive view is based on Gigamon’s dominant position in the fast-growing and underpenetrated market for network visibility. As the strategic value of the network becomes more paramount, security, network automation, and analytics platforms are moving from a nice-to-have discretionary spending item to a strategic investment. Gigamon allows customers to increase return on investment for past monitoring tool purchases, defer investments in additional tools, and increase network-wide visibility.
Quidel Corporation (NASDAQ: QDEL) - We see Quidel’s pipeline as one of the best in diagnostics in terms of both breadth and depth. The pipeline spans multiple technologies (e.g., lateral flow, DFA, molecular) and markets (e.g., hospital/reference labs and doctor’s offices), and the early stages of that pipeline (namely Sofia) have already begun contributing to sales growth. Sofia system placements are the key driver of near-term revenue, and placements continue to track to 10,000 by 2015 with the broad menu enabling utilization.
eHealth, Inc. (NASDAQ: EHTH) - We believe that eHealth is one of the best pure-play investments on the Affordable Care Act (ACA) legislation, rising healthcare costs, and the retirement-age baby-boomer generation. With the company primed to take advantage of opportunities in both core health insurance markets, eHealth has the potential to increase EPS more than 40% per year from 2013 through 2015
Capella Education Company (NASDAQ: CPLA) - Capella is an innovative online education provider with virtually no policy exposure that recently returned to new enrollment growth and should see significant operating leverage once it returns to total enrollment growth in 2014.
BroadSoft, Inc. (NASDAQ: BSFT) - We believe that BroadSoft is the primary beneficiary of a secular shift in enterprises moving their noncore communications infrastructure assets to the cloud.
ICF International, Inc. (NASDAQ: ICFI) - We expect continued double-digit growth in the nonfederal part of the business, which is about 45% of revenue. The company’s commercial consulting business is well positioned to capitalize on its expertise in a variety of high-growth subsectors—energy efficiency, aviation, healthcare, digital interactive, and environmental risk mitigation
E2open, Inc. (NASDAQ: EOPN) - Up- and cross-sell. E2open has a large opportunity to up-sell its existing base of customers; the company is only about 20% penetrated in this group. With most customers having purchased roughly 2 applications/modules (out of about 12-15, depending on the industry), there is enough room for material growth simply by up-selling existing customers. In
addition, we believe that the company should be able to expand its product offering over the coming years through product acquisitions (such as the icon-scm purchase) and internal development, enabling it to garner even more wallet share from its customers. The company has also doubled its salesforce over the past two years and plans to continue to expand its salesforce in line with its targeted new and up-sold bookings growth (30%). In conjunction with this increase in sales personnel, E2open has increased the number of customers from the low 30s three years ago to more than 100 today, presenting a compelling captive base to up-sell into.
Marcus & Millichap, Inc. (NYSE: MMI) - Marcus & Millichap is the largest provider of commercial real estate services to a highly fragmented market, the private client segment. The private client segment accounts for more than 80% of all commercial real estate transactions, giving Marcus & Millichap a large amount of potential deal flow. The complexities around creating scale in such a fragmented market have forced many of the larger national brokerages to ignore the private client segment and allocate resources in the institutional market, giving Marcus & Millichap an opportunity to garner additional market share.
RE/MAX Holdings, Inc. (NYSE: RMAX) - Re/Max is a leading residential real estate franchise and boasts a network of more than 90,000 agents across 95 countries, with the majority of agents in the United States and Canada. Re/Max, in our opinion, is an attractive way to play the recovery in existing home sales for investors that prefer a business with more-predictable results. The franchise model means that revenues are largely dependent on agent count, not home sales. We estimate that more than two-thirds of Re/Max’s revenue is recurring in nature, which is driven by total agent count and related fees at the company’s franchises. Moreover, we expect that Re/Max’s unique value proposition of offering its agents an entrepreneurial culture, technology platforms and leads, and attractive commission splits will continue to resonate within the marketplace, thus enabling the company to grow at a faster pace than most would expect, as we anticipate Re/Max will be the beneficiary of retaining quality agents while attracting productive agent
MaxLinear, Inc. (NYSE: MXL) - MaxLinear is well positioned to benefit from secular growth drivers: the increasing need for smaller, more-power efficient tuners that deliver faster data speeds and new operator services
BioDelivery Sciences International (NASDAQ: BDSI) - We believe that 2014 should be transformative for BioDelivery Sciences. The launch of Bunavail by the company in mid-2014 for the treatment of opioid addiction should alone be a significant value-creating event and lead to upside from current levels
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