Top Five Small-Cap Stocks

LSI Industries(LYTS Quote) provides corporate visual image solutions to the petroleum/convenience-store industry. It has been rated a buy since September 2005. The company's revenue growth outpaces the industry average, and it has no debt to speak of.

LSI's fiscal-year first-quarter net income increased 27% from a year ago to $7 million, or 32 cents a share, while sales rose 4% to $90 million. The stock has risen over the past year, reflecting both the market's overall trend during that period and the company's robust earnings growth. These strengths outweigh the company's low profit margins.

Neogen(NEOG Quote) which makes test kits for food and animal safety, has been rated a buy since November 2005. The company recently reported that fiscal-year first-quarter revenue increased 13% over a year ago to $22.9 million, while EPS improved by 19.3%. Neogen has demonstrated a pattern of EPS growth over the past two years, and this trend is expected to continue. Net income increased by 25.1% to $3.01 million in the fiscal first quarter compared with the same period last year.

The company has no debt to speak of, and it maintains a quick ratio of 2.64, which clearly demonstrates the ability to cover short-term cash needs. Investors have apparently begun to recognize these positive factors, which have helped drive up the company's shares by a sharp 100.14% over the past year.

Although almost any stock can fall in a broad market decline, Neogen should continue to move higher even though it has already enjoyed a very nice gain in the past year. And though no company is perfect, currently TheStreet.com Ratings does not see any significant weaknesses that are likely to detract from the generally positive outlook.