Being small is seen as a weakness during these tumultuous and uncertain times, but a number of junior stocks have outgunned their much larger rivals in recent months. This may surprise some people, as small companies are generally seen to be more vulnerable to a sharp economic downturn because of their lower-quality earnings stream - a product of their relatively weak competitive position. But small companies have one thing going for them that larger stocks do not - the ability to grow more quickly once the economy turns for the better. "Small companies are able to grow faster from a smaller base. When you are JB Hi-Fi, it's reasonable to be doubling your business over a number of years. When you are BHP Billiton, it's bloody hard," said Hyperion Asset Management institutional business director Tim Samway. Another area small caps excel in is finding pockets in the market that have been poorly serviced by larger rivals. M2 Telecommunications Group is an example. The telecoms services reseller does not own any infrastructure but sells excess network capacity from market incumbents such as Optus, which is owned by Australian Stock Exchange-listed Singapore Telecoms. "M2 is still growing strongly and, if you look at Telstra and Optus, they are not really delivering any growth. M2 is in a space where the larger guys are a little bit clumsy or not as focused," said MicroEQUITIES research head Carlos Gil. "The other driver is acquisitions. M2 has made about four acquisitions over the last three years and they're very experienced in buying cheaply." M2 posted a 63 per cent rise in net profit to $3.2 million for the six months to December 31 over the previous comparable period and increased its interim dividend by 0.5¢ to 2.5¢ a share. This implies a net yield of about 11 per cent. The company has forecast a 50 per cent rise in full-year revenue and a 45 per cent increase in earnings before interest, tax, depreciation and amortisation - excluding contributions from its People Telecom acquisition in December. In the transport and logistics space, dominated by struggling operators such as Brambles, Lindsay Australia is proving that small can be advantageous. "Our on-time performance is 97 to 98 per cent and our management style is very hands on, which means we are right on top of our costs on a daily basis. It's totally different for a large company out there," said chief executive Michael Lindsay. The company, which generates more than 90 per cent of its revenue from the Queensland food industry, reported a net profit of $2.4 million for the six months to December 31- an 88.3 per cent increase on the previous comparable period. It has also increased its interim dividend to 0.6¢ from 0.5¢ a share. The company expects a slower second half due to seasonal factors, but is aiming for a full-year net profit of $2.95 million to $3.55 million. Meanwhile, domestic airline Regional Express Holdings is attempting to fly above the turbulence afflicting the industry. Its general manager of corporate services, Irwin Tan, said the economic slowdown had not hit the regional carrier as hard because it was not exposed to international tourism, as were market leaders such as Qantas. Regional Express was the only listed airline to report both revenue and earnings growth for the six months to December 31, although total passenger numbers fell 8.9 per cent. The carrier posted a 1.9 per cent increase in half-year net profit to $10.5 million as revenue rose 5.4 per cent to $135.8 million. However, things are likely to get more challenging. The company saw a 20 per cent fall in traffic in January and demand for its charter service has tumbled 40 per cent. Still, Mr Tan does not appear worried. "If I was a betting man, I would bet on Regional Express because we are in a position to take advantage of all the opportunities that may come," he said.