Top Five Small-Cap Stocks

Electronic-components maker Spectrum Control(SPEC Quote) has been rated buy since August 2005. The company reported robust revenue growth for the second quarter of 2007, coming in higher than the industry average of 3.0%.

Spectrum Control has a solid financial position with reasonable debt levels, solid stock price performance, an impressive record of earnings-per-share growth and compelling growth in net income. These strengths outweigh the company's low profit margins.

Telecom services provider Atlantic Tele-Network(ATNI Quote) has been rated a buy since August 2005. Its revenue increased 17.9% in the second quarter compared with the same period last year, supported by strong sales across its business segments. Net income grew by 83.4% over the same time frame, driven by margin expansion, lower interest expense and lower taxes.

The company also provides a good dividend yield at current market prices. The principal risks include termination of the company's exclusive right to provide wireline local and long-distance telephone services in Guyana as well as any adverse regulatory developments or economic conditions. Also, intensifying competition poses a significant threat to Atlantic Tele-Network's future prospects.