On the surface, SkyWest (Nasdaq: SKYW) might not seem all that compelling an investment. The small regional airline, which offers 1,700 daily flights mainly within North America, has eroding revenue and only turned a profit in two of the past four full fiscal years.

Yet shares of the company are selling for nearly triple the October 2014 low of about $7, which they hit during the market’s broad pullback that month. Considering SkyWest’s tepid financials, what could be keeping its stock aloft?

Ironically, the company’s financials—or more precisely, expectations for them, which SkyWest has been soundly beating in recent quarters. The trend continued in the third quarter, when revenue came in 3% above estimates and earnings beat by 8%.

But as much as it likes positive surprises, the market also wants to know a company is moving decisively to promote sustainable growth. SkyWest certainly is, a key strategy being to replace unprofitable smaller aircraft carrying only 30 or 50 passengers with larger 65 and 76 seaters, which have substantially more earning potential.

During the 12 months ended September 30th, SkyWest removed 141 of the smaller planes from its fleet and added 57 of the larger ones. It plans to add more of the latter in coming quarters.

Replacing unprofitable planes helped increase the third-quarter operating margin to 9.9% from 7.1% in the prior year’s third quarter. SkyWest also boosted financial performance by inking new deals to fly for other carriers, and by renewing existing agreements to provide such services.

Importantly, management is committed to turning around ExpressJet, an acquisition that has seen its share of red ink since SkyWest purchased the small Houston-based airline five years ago. President Russell Childs described SkyWest’s approach to ExpressJet during the third-quarter conference call:

Our immediate focus is positioning ExpressJet for a competitive and profitable future. This includes potential extensions on aircraft to improve profitability. As we have previously disclosed, we expect ExpressJet to lose money in 2016. However, we are in discussions with our partners to move forward with more sustainable contracts.

With SkyWest poised to improve, CFO Robert Simmons expressed optimism about the future:

For next quarter we would expect year-over-year EPS to show modest improvement and we also expect year-over-year growth for the full year of 2016 in the 10% ballpark, excluding the noise from any potential fleet related charges and the caveats I mentioned earlier about Q2 training and other expenses.

That forecast is in line with consensus projections, confirming SkyWest is on the right track. Of the four analysts covering the stock, three rate it a “buy.”

Around the Roadrunner Portfolios

China Biologic Products (Nasdaq: CBPO) is one of our best picks of 2015, returning about 70% since we added it to the small-cap momentum portfolio in January. In fact, the Beijing-based biotech has been on a tear for some time, soaring 56% in 2012, 77% in 2013 and 133% in 2014.

But we believe this high-growth story is far from over.

That’s because it’s at the forefront of a nascent, fast-growing segment of the Chinese healthcare market: pharmaceuticals made from plasma, the main component of human blood.

Like drug companies in the U.S. and other developed markets, China Biologic uses the clear, straw-colored liquid to make the fluid solutions hospitals administer to patients in shock resulting from blood loss or burns. The company’s plasma-based lineup also includes intravenous immunoglobulins (IVIGs), which are medicines for a variety of serious conditions like rabies, tetanus, hepatitis B and clotting problems.

Owing to its leadership in these areas, China Biologic increased annual revenue and profits roughly nine-fold apiece since 2007 to $286 million and $3.16 a share, respectively. The company just reported strong third-quarter results, which included year-over-year gains of 14% and 24%, respectively, in the top and bottom lines.

During the third-quarter conference call, CEO David Gao acknowledged that plasma inventory was low heading into the quarter because of exceptionally strong product demand in the first half of the year. However, Gao stressed inventory had been replenished and China Biologic was set for sustainable long-term expansion.

He also announced another key growth catalyst—a green light from the China Food and Drug Administration to begin clinical trials on the next generation of IVIGs:

We expect to be able to complete these clinical trials over the next 24 months, such that we will begin commercial production of our next-generation IVIG in our new fractionation facility in Shandong in 2018.

Even after four straight years of huge gains, China Biologic’s stock only trades for 26 times 2016 estimates. In the high-priced biotech sector, that’s a veritable bargain.

Momentum portfolio holding Paycom Software (NYSE: PAYC) had a superb third quarter.

On November 3, the Oklahoma City-based provider of online human resources technology reported a 51% year-over-year increase in third-quarter revenue to $55.3 million, marking its 19th straight quarter of double-digit top-line growth. Quarterly earnings of $0.08 per share, which represented a 60% gain, surpassed estimates by $0.01.

During the Q3 conference call, CEO Chad Richison said Paycom keeps performing robustly because its salesforce is maturing and the company offers a powerful yet user-friendly cloud-based HR system that’s gaining traction in target markets, small and medium-sized businesses with up to 2,000 employees. The system attracts such businesses with services like employment application tracking, background checks, payroll and employee training.

Plus, Paycom regularly adds new services, like the Affordable Care Act (ACA) Toolkit it launched in June to help clients comply with the 2010 healthcare reform legislation the Obama administration championed. Also in June, the company announced the release of GL Concierge, an accounting application designed to further streamline the payroll process.

Looking forward, Richison sees plenty more need for Paycom’s services because so many smaller businesses have inefficient HR functions. As he related during the conference call:

As we speak with prospective customers, we routinely encounter companies that have substandard solutions in place, and as a result are not fully leveraging their valuable talent asset. Many are deploying multiple systems that have been pieced together over years. In these situations, we typically find multiple log-on requirements for employees, as well as a difficult user interface.

Paycom, recently trading around $44 a share, is up about 12% since the latest earnings report and more than 30% since we added it to the small-cap momentum portfolio on April 29. However, continued strong growth suggests these shares still have ample upside.

Vipshop Holdings (Nasdaq: VIPS) dropped 33% in the two days following its issuance of a revenue warning for its third quarter. I almost can’t write “warning” with a straight face because the “warning” involves revenue growth of “only” between 61% and 63%, compared to previous guidance of 71% to 74% growth. To be clear, 61% revenue growth is awesome, the type of ultra-strong growth virtually any company would be ecstatic to achieve. The company blames “warmer-than-expected fall weather in China, which caused customers to delay purchases of relatively higher-priced autumn and winter apparel.” 

The Jefferies brokerage thinks the revenue miss might also be caused by increased competition from other Chinese online retailers such as Alibaba and JD.com, but even so the Jefferies analyst maintained a “buy” rating on the stock and has a $23 price target, which is 84% above its current price of $12.50. Hard to believe that this Chinese former high-flyer has fallen so far that it now can be considered a value stock, with a PEG ratio under 1.0.

I love growth stocks at reasonable valuations and Vipshop definitely qualifies, but the fact remains that its severe price drop is the antithesis of positive momentum, so the stock’s continued inclusion in the Momentum Portfolio is questionable.