Top Five Small-Cap Stocks

Each weekday, TheStreet.com Ratings compiles a list of the top five stocks in five categories -- fast-growth, all-around value, large-cap, mid-cap and small-cap -- and publishes these lists in the Ratings section of our Web site.

This list, updated daily, is based on data from the close of the previous trading session. Today, small-cap stocks are in the spotlight. These are stocks of companies that have market capitalizations of between $50 million and $500 million that rank near the top of all stocks rated by our proprietary quantitative model, which looks at more than 60 factors.

The stocks must also be followed by at least one financial analyst who posts estimates on the Institutional Brokers' Estimate System. They are ordered by their potential to appreciate.

Note that no provision is made for off-balance-sheet assets such as unrealized appreciation/depreciation of investments, market value of real estate or contingent liabilities that might affect book value. This could be material for some companies with large underfunded pension plans.

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Today begins with LSI Industries(LYTS Quote), which supplies lighting fixtures and graphics elements for applications in the retail, specialty niche and commercial markets. It has been rated a buy since August 2005. The company's revenue growth outpaces the industry average, and its debt-to-equity ratio of 0.04 is also better than that of its industry, implying that there has been very successful management of debt levels. LSI's net income increased by 36.6% in the third quarter of its fiscal 2007 when compared with the same quarter one year ago, rising to $3.30 million from $2.42 million.