TheStreet.com Ratings: 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 Procentury Corp.(PROS Quote), which markets and underwrites general liability, commercial liability and multi-peril liability for small and mid-sized businesses. It has been rated a buy since October 2006.

The rating reflects a number of Procentury's strengths, including strong revenue growth, a very low debt-to-equity ratio and a pattern of positive EPS growth over the past two years. These strengths outweigh the company's low profit margins.

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Martin Midstream(MMLP Quote) provides marine transportation, terminalling, distribution and midstream logistical services for producers and suppliers of hydrocarbon products and byproducts. It has been rated a buy since June 2005.

The company shows impressive revenue growth, significantly increased net operating cash flow and strong stock price performance. These positives outweigh concerns about Martin Midstream's growth in net income.