While economic headlines may suggest a gloomy scenario, corporate income statements and balance sheets continue to suggest a slightly more optimistic scenario, than gloom and doom. While never typically on the radar screen or grabbing headlines, some appealing small caps could be poised for a solid 2012 and beyond.

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Cheap by Numbers
Statistically cheap stocks can offer allure to value seeking investors, but caution should be used when bottom fishing; many bargains turn out to be duds, at any price. Sterling Construction (Nasdaq:STRL) offers a lot of allure. This small cap focuses exclusively on infrastructure construction in Texas and neighboring states. Shares trade for $12 against book value of over $15 and the balance sheet has nearly $4 per share, in net cash. An uptick in construction volume in 2012, could have a profound effect STRL top and bottom line.

TravelCenters of America (NYSE:TA) has had a tough time, since the recession kicked in. The company operates large interstate gas stations for trucks and other vehicles. These travel centers often include several fast food restaurants, convenience stores, auto repair shops and, in some cases, a motel. Shares currently trade for about $4.30 or a market cap of $122 million. Book value per share exceeds $11 and the balance sheet has $30 million in net cash.

Continuing a Winning Streak
Dorman Products (Nasdaq:DORM) looks poised for another solid year in 2012. The supplier of after market auto parts to retailers continues to prosper in the current economy. While share price performance has been flat thus far in 2011, sales and profits have been growing throughout the year and show no signs of letting up next year. Continued growth will provide a favorable tailwind to the share price, currently trading at just over $37, or a P/E of 14.

Discount home furnishing retailer Cost Plus (Nasdaq:CPWM) is poised for significant growth in 2012. EPS estimates call for 63 cents in 2012, versus 27 cents in 2011. Even though consumers are cutting back on spending, the company's stores offer shoppers a way to decorate for less.

The Bottom Line
For many investors, 2011 will be a year to gladly forget. Looking ahead in 2012, signs suggest that another U.S. recession is unlikely. Small caps offer a shot at higher growth over larger established companies and that could fuel share prices.

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At the time of writing, Sham Gad did not own shares in any of the companies mentioned in this article.



Tickers in this Article: STRL, TA, DORM, CPWM

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