There is a body of research that shows that over thelong term, small-cap stocks consistentlyoutperform their large-cap brethren.
With this in mind, Iscreened the market for the top small-cap growth stocks. Here are just five of the screens results.
All companies have a market cap between 50m and 150m with a price toearningsgrowth ratio of less than one.
Leading toymaker
Character(LSE: CCT) is one of the UKs leading toymakers and sales are booming.
The company manufactures brandedchildrenstoys including thePeppa Pig, Scooby Doo, Doctor Who, Fireman SamandWeebles brands.
And sales have really taken off over the past year. For the six months to28 February 2015, Character reported record revenues and profits. Pre-tax profit jumped 178% year on year while revenue increased by a quarter.
Further growth is predicted for the rest of the year. City analysts believe that Characters earnings per share are set to jump by 51% for full-year 2015. The company is currently trading at a forward P/E of 10 and a PEG ratio of 0.2.
Booming home sales
Inland Homes(LSE: INL) is a great small-cap play on the UKs booming housing market. City analysts have pencilled in 70% earnings per share growth for Inland during 2015, suggesting that the company is trading at a forward P/E of 14.5. These figures indicate a PEG ratio of 0.2.
Analysts believe that Inlands earnings will expand a further 18% during 2016, which means that the group is trading at a 2016 P/E of only 12.4. Inlandcurrently yields 1.2%.
Slow and steady
Education support services companyTribal Groups(LSE: TRB)growth isnt anything to get excited about, but the groups low valuation, combined with its stable earnings growth, earns it a place on this list.
Tribals earningsare set to expand 13% during 2015 and 10% during 2016. According to City figures, the company currently trades at a forward P/E of 11.4 and 2016 P/E of 10.4. This low valuation coupled with Tribals double-digit growth rate means that the group is trading at a PEG ratio of 0.9.
Tribal currently yields 1.4%.
Boring is good
Victoria (LSE: VCP) is an international carpet producer and distributor hardly the most exciting business in the world.
Nevertheless, demand for carpets is taking off and Victorias earnings per share are set to jump by 36% this year. The company is currently trading at a relatively demanding forward P/E of 25.7, although when compared to Victorias projected earnings growth, this valuation isnt overly concerning. Victoria currently trades at a PEG ratio of 0.7.
According to City figures, the companys earnings are set to grow a further 41% during 2016. Victoria is trading at a 2016 P/E of 18.3.
Recovery in progress
The last company on my small-cap growth list isVolex(LSE: VLX).Volexhas struggled to turn a profit during the past two years, as falling sales and a drastic restructuring program have taken their toll on results.
Nevertheless, according to the Citys figures,Volexis set to return to growth during 2016. Specifically,Volexsearnings per share are set to rise 126% during 2016. This means that thecompanyis trading at a 2016 P/E of 13 and PEG ratio of 0.1.
Earnings growth of 20% is expected during 2017 andVolexis trading at a 2017 P/E of 9.4.
Top growth pick
Our top analysts here at The Motley Fool have discovered a company that they believe could see its sales increase by300% to 500%over the next few years.This is one of the most impressive growth stocks around.
However, few have realised its potential, and as a result, the company in question has been touted a one of themarket’s hidden gems.
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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
