STOCK PICKS: Top Five Small-Caps for Sept. 26

Each business day, TheStreet.com Ratings compiles a list of the top five stocks in five categories -- fast-growth, all-around value, large-cap, mid-cap and small-cap.

This list is based on data from the close of the previous trading session. Today, small-cap stocks are in the spotlight. These are stocks of companies that have market capitalizations of between $50 million and $500 million that rank near the top of all stocks rated by our proprietary quantitative model, which looks at more than 60 factors.

The stocks must also be followed by at least one financial analyst who posts estimates on the Institutional Brokers' Estimate System. They are ordered by their potential to appreciate.

Note that no provision is made for off-balance-sheet assets such as unrealized appreciation/depreciation of investments, market value of real estate or contingent liabilities that might affect book value. This could be material for some companies with large underfunded pension plans.

American Ecology(ECOL) is one of the nation's oldest providers of radioactive, hazardous and industrial waste management services. The company's customers are commercial and government entities, such as nuclear power plants, medical and academic institutions, steel mills, refineries and chemical production facilities.

We have rated American Ecology a buy since October 2005. The company reported record operating results for the second quarter of fiscal 2008, as operating income rose 20% year over year to $9.8 million. Net income also climbed 20%, reaching $6.1 million compared with $5.1 million in the same quarter one year prior, due to strong growth in disposal service revenue as the Idaho, Nevada, and Texas waste facilities increased the amount of waste disposed by 18% year over year. However, lower transportation revenue partially offset the increase in disposal service revenue. American Ecology also reported a 17% increase in gross profit for the second quarter, and the company had no debt at quarter end. In addition, the company declared a quarterly dividend of 18 cents per common share, which was a 20% increase from the prior quarterly dividend of 15 cents per common share.