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4 cheap small cap stocks I’ve got my eye for Christmas

The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is down again today, but it’s been a rollercoaster ride over the past month or so – as you can see from the chart below.

S&P/ASX 200 performance December 2014

Source: Yahoo!7

Since January this year, the index has gone precisely nowhere – down 2.5%. By contrast, the US indices have soared, with the Dow Jones up 6% and the S&P 500 more than 10%.

Interestingly, several companies are beginning to look very attractive, including these 4 stocks…

Almond grower and processor Select Harvests Limited (ASX: SHV) has seen its share price hammered down nearly 5% in the past week. You’d almost think it was an oil stock! Currently trading on a trailing P/E ratio of 11.1x, and paying a dividend yield of 3.8% (unfranked), it looks attractive. But production is expected to rise substantially this financial year, and earnings are expected to grow by 33%. At the current price of $6.26, I’m starting to get interested.

LifeHealthcare Group Ltd (ASX: LHC) has seen its share price fall from above $2.40 down to $2.12 currently. The distributor of medical equipment also looks relatively cheap, trading on a trailing P/E ratio of 11.6x and paying a 4.5% fully franked dividend. IOOF Holdings Limited (ASX: IFL) appears to have noticed, recently increasing its stake from 6.5% to 7.7%. Back in October, LifeHealthcare reported that it had fully hedged its exposure to the falling Aussie dollar, and was on track to meet its first half of 2015 prospectus forecast.

Godfreys Group (ASX: GFY) only listed on the ASX this week, with an IPO price of $2.75. The vacuum cleaning specialists offer a wide range of company-owned private brands, third party brands such as Bissel, Electrolux and Miele as well as an exclusive licence with Hoover. At the IPO price, shares were being offered on a prospective P/E ratio of just over 9x, and forecast to pay a fully franked dividend of between 7.7% and 8.8% (depending on payout level). Shares have since risen to $2.93, but it still looks attractive.

TFS Corporation Limited (ASX: TFC) has seen its share price smashed down from a high of $2.24 in September this year, to around $1.43 currently. Australia’s only listed sandalwood producer and refiner, I suggested it looked attractive in November last year, when it was trading at 76.5 cents. TFS is finally moving into the production phase, having waited years for sandalwood trees to mature. The company says it expects to make $70 million in net profit in the 2015 financial year, placing it on a P/E ratio of just 7x. Dividends are also likely to start flowing.

These 3 stocks could be the next big movers in 2020

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Motley Fool writer/analyst Mike King owns shares in LifeHealthcare and TFS Corp. You can follow Mike on Twitter @TMFKinga

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