STOCK PICKS: Top 5 Small-Caps for July 4

Stepan(SCL Quote) is a global manufacturer that produces specialty and intermediate chemicals. These products are sold to other manufacturers to be made into a variety of end products.

We have rated Stepan a buy since May 2007, based on strengths such as its robust revenue growth, solid stock price performance and compelling growth in net income. For the first quarter of fiscal 2008, Stepan's revenue rose by 21.9% year-over-year. This in turn appears to have helped boost earnings per share, which increased from 56 cents in the first quarter of fiscal 2007 to 85 cents in the most recent quarter. Net income grew 53.8% when compared to the same quarter a year ago, rising from $5.69 million to $8.75 million. Stepan also reported that its gross profit increased 32% due to a significant improvement in earnings from its surfactants business.

Management announced that it was pleased with the company's progress in the first quarter as efforts to improve the customer and product mix contributed to the increased profitability of Stepan's global surfactant business. Looking forward, management anticipates continued profit growth compared to last year, despite their concerns about the potential impacts of a recession.

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.