In a bull market, investors will pile into large cap stocks.
That is why the Dow Jones Industrial Average (NYSE:DIA) and the Standard and Poor’s 500 Index (NYSE: SPY) have done so well. The great majority of investing, about 70 percent, is done by institutional investors such as mutual funds and pension groups. Due to the amount of money involved, they buy larger stocks. Many are prohibited by charter from buying stocks below a certain market capitalization. That results in appealing small caps like Quadrant 4 System (NASDAQ: QFOR) being so alluring for both growth and value investors.
Quadrant 4 System is an information technology firm with many attractive features.
According to Yahoo! Finance, its revenue growth is nearly 40 percent on a quarterly basis. That far exceeds others in the sector such as IBM (NYSE: IBM), which has revenue growth on a quarterly basis. Quadrant 4 System also has a broad base of clients with a very high retention rate. It has hundreds of workers in several countries: this is not a small cap without revenues operating from a garage somewhere!
That revenue growth makes the stock an ideal holding for value investors.
Quadrant 4 System is unique in that the market capitalization is just about equal to the revenues. That is very rare. IBM sells for twice revenues. Quadrant 4 System also has much higher revenue growth than IBM. That adds to its appeal as a value stock.
Needless to say, numbers like that do not go unnoticed by Wall Street.
Quadrant 4 System has received bullish recommendations from three analysts. That is very unusual, and very positive. Many small caps do not even have one analyst following the stock. For Quadrant 4 System to have three is an important tell as to what is expected in the future for the stock.
Quadrant 4 System has also posted a solid gross profit of about one-quarter revenues.