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We expect Exactech to benefit from its continued innovation and expansion. The company remains focused on improving its existing line of business, and it is also awaiting approval on several new products in both the U.S. and overseas markets. However, the company is highly exposed to foreign-exchange risks with its increasing share of global business, and stiff government regulation could negatively affect product approvals and therefore operating results.

Balchem (BCPC) develops, manufactures and markets specialty performance ingredients and products for the food, feed and mechanical sterilization industries. Balchem produces choline products for both human and animal consumption. Choline, a vitamin-B complex, plays a vital role in the metabolism of fat and the building and maintaining of cell structures. Choline deficiency can result in reduced growth and perosis (a disease characterized by a deformity of the leg joint) in poultry and fatty liver, kidney necrosis and general poor health in swine, among other symptoms. In humans, choline is recognized as playing a key role in the structural integrity of cell membranes, the processing of dietary fat, reproductive development, and neural functions such as memory and muscle function.

Balchem also produces encapsulated performance ingredients for use throughout the food and animal-health industries in end products such as baked goods, refrigerated and frozen dough, processed meats, seasoning blends and confections. These performance ingredients are used to enhance nutritional fortification and improve shelf life of prepared products.

Our buy rating for Balchem has not changed since June 2003. The company's strengths include impressive revenue growth, solid stock-price performance and net income growth. For the fourth quarter of fiscal 2007, revenue more than doubled year over year. This growth appears to have trickled down to the company's bottom line, improving earnings per share (EPS). Balchem reported 27% growth in EPS in the most recent quarter. Net income also increased by 29% from the year-ago quarter, rising from $3.2 million to $4.2 million. Powered by strong earnings growth and other driving factors, this stock has surged 28% over the past year.

For fiscal 2007, management was pleased with the integrations of two earlier acquisitions, Chinook and Akzo, and expects those acquisitions to continue to contribute positively to earnings. However, management also expects rising raw-material costs to be a challenge in the near term. While the company has taken pricing steps to counteract the effects of these increased input costs, such actions in the fourth quarter were not enough to offset them completely. Additional price increases were made effective in January 2008, and management therefore expects fiscal 2008 to see continuing improvements in sales and earnings, while cautioning that global economic issues could affect the company's results.

American Physicians Service Group (AMPH) is an insurance and financial services firm. Its subsidiaries and affiliates provide medical malpractice insurance as well as brokerage and investment services to institutions and high-net-worth individuals. One subsidiary, APS Financial, also provides portfolio accounting, analysis and other services to insurance companies, banks and public funds. Other subsidiaries include APS Clearing, Asset Management, APS Insurance Services and APS Facilities Management. A final subsidiary, American Physicians Insurance Company, is a former client that was acquired in April 2007 and is now a wholly-owned subsidiary. American Physicians Services Group has been in business since 1975 and has been publicly traded on the Nasdaq since 1983.

Because of such strengths as robust revenue growth, a largely solid financial position, net income growth and solid stock-price performance, American Physicians Service has been rated a buy since May 2003. For the fourth quarter of fiscal 2007, revenue rose to $22.8 million from $10.8 million in 2006. Net earnings were reported at $6 million, or 82 cents a share, up from. $1.6 million, or 56 cents a share, a year ago.

Even the best stocks can fall in a down market, but we feel that this stock has good upside potential in any other market environment.

Standard Parking (STAN) is a provider of parking facility management services throughout the U.S. and Canada. The company provides on-site management services at multilevel and surface parking facilities for all major markets of the parking industry. The company manages parking-related and shuttle bus operations serving airports throughout the U.S, including Chicago O'Hare International Airport, Cleveland Hopkins International Airport, and Dallas-Fort Worth International Airport. In addition, Standard Parking's client list includes some of the nation's largest private and public owners, managers and developers of major office buildings, residential properties, commercial properties, shopping centers and other retail properties, sports and special event complexes, hotels and hospitals and medical centers.

The company also provides related ancillary services, such as valet parking services at urban and airport locations, as well as on-street parking enforcement and meter collection services for municipal clients. Parking properties are operated through two types of arrangements: management contracts and leases. Standard Parking does not own any parking facilities and, as a result, it assumes few of the risks of real estate ownership.

Our buy rating for Standard Parking has not changed since November 2006. For the fourth quarter of fiscal 2007, revenue increased 10% year over year to $75.2 million, due primarily to 24% growth in management contract revenue. Gross profit also increased 19%. For full year 2007, the company reported revenue and gross profit growth of 3% and 13%, respectively. Operating income also increased 23%. The company completed four acquisitions during the year, along with $22.1 million worth of share repurchases.

During the fourth quarter, the company completed several new agreements, including: a multi-year contract to provide parking management, valet, and special event services at Yankee Stadium; a contract to manage and staff Alatus Partners' parking operation in Minneapolis; and, the expansion of existing relationships with the New Jersey Transit Authority and General Growth Properties.

Looking ahead to 2008, management expects earnings per share to range from 90 cents to 95 cents for the year. While the company has exhibited relatively poor debt management in the past, we feel that strengths such as solid stock performance and growth in earnings per share outweigh this and any other weaknesses.

Our quantitative rating is based on a variety of historical fundamental and pricing data and represents our opinion of a stock's risk-adjusted performance relative to other stocks.

However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could affect the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company.

For those reasons, we believe that a rating alone cannot tell the whole story. and that it should be part of an investor's overall research.

This article was written by a staff member of TheStreet.com Ratings.
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