Stockpickr: The Top Small-Cap Value Plays

I believe part of the reason shares of FreightCar sold off in May was because activist hedge fund Pirate Capital is being required to give up its position in the company due to redemptions. The company is also a candidate for a short squeeze: It would take nine days of nonstop covering to cover all the shares short at the current volumes.

Super hedge fund Citadel also owns FreightCar.

Aspreva Pharmaceuticals(ASPV Quote) is also on our list of small-cap value plays. The company has a $693 million market cap and $228 million cash in the bank with no debt, giving it an enterprise value of $465 million. Combine that with $126 million in cash flows and you get a company trading at just 3.5 times cash flows.

Meanwhile, analysts expect the company to continue its strong growth, forecasting revenue to increase from $212 million in 2006 to $237 million in 2007. They also expect the company to earn $3.45 per share in 2007.

Aspreva also shows up on the Stockpickr list of top free cash flow stocks, as well as a list compiled by Stockpickr member "BamBam" of Magic Formula stocks. These are names that satisfy the conditions of Joel Greenblatt's successful investing book The Little Book That Beats the Market, in which he recommends buying stocks with low multiples over cash flows and high returns on equity.

The list of 25 dirt cheap small-cap stocks includes Plexus(PLXS Quote), Avatar Holdings(AVTR Quote) and Omnivision Technologies(OVTI Quote). For the full list of small-cap value plays on Stockpickr, click here.

To keep track of when we update the list (approximately every week), sign up and bookmark the portfolio by rating it with four stars.

Stockpickr tip of the day: Several Stockpickr members keep track of the "magic formula" mentioned in Greenblatt's groundbreaking book. To find these portfolios, go to Stockpickr's search button and type in "magic."

To see Greenblatt's portfolio, click here.

To see the portfolio of Greenblatt's sister, who runs several hundred million dollars in her own retail-focused hedge fund called Saddle Rock Capital, click here.