Top Five Small-Cap Stocks

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National Research(NRCI Quote), which provides ongoing survey-based performance measurement for the health care industry, has been rated a buy since November 2006. The company has shown growth in revenue, earnings per share and net income. Revenue has grown over the year-ago quarter and came in higher than the industry average. These strengths outweigh the fact that the company has had somewhat disappointing return on equity.

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Multi-Color Corporation(LABL Quote) supplies decorative label solutions and packaging services to consumer product and food and beverage companies. It has been rated a buy since February 2006.

The company's revenue grew by 6.19% in the second quarter of its fiscal 2008 compared with the same period last year, outpacing the industry average of 0.7%. Multi-Color also has no debt to speak of, and a quick ratio of 1.52, which demonstrates its ability to cover short-term liquidity needs.

Its stock price has gone up by 8.36% in the 12 months prior to Dec. 14, and while even the best stocks can fall in an overall down market, in any other environment, Multi-Color's stock still has good upside potential.

These strengths outweigh the company's somewhat disappointing return on equity.

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Axsys Technologies(AXYS Quote), which makes optical system components, has been rated a buy since November 2005. Robust demand for infrared camera and lens products and contributions from the acquisition of Cineflec drove third-quarter revenue growth of 34.4% to $45.22 million compared with the same period last year. Axsys' continued investment in capital equipment and focus on research and development could enhance production capacity and enable it to respond rapidly to changing technological developments in the industry.