Top 5 Small-Caps for Nov. 28

Management stated that the company was fortunate to operate in markets that were not as heavily impacted by the national and global economic crisis as some areas of the country. A focus on long-term results allowed Tompkins to continue to perform well in challenging economic times, allowing the company to grow its business while still avoiding high-profile risky loans and investments. Although the company's stock is currently trading at a premium valuation, we feel that its strengths justify the higher price levels at this time.

Diamond Foods(DMND Quote) processes and markets culinary, snack, in-shell and ingredient nuts. We upgraded Diamond Foods from a hold to a buy in July 2008 on the basis of the company's impressive record of EPS growth, increases in revenue and net income, and largely solid financial position.

For the fourth quarter of fiscal 2008, the company reported that its revenue increased slightly, rising 0.6% year over year. However, net income grew significantly, surging 240.3% from $770,000 in the fourth quarter of fiscal 2007 to $2.6 million in the most recent quarter. EPS improved from 5 cents to 16 cents, and we feel that the company should be able to continue its trend of positive EPS growth seen in the past year. Diamond has a very low debt-to-equity ratio of 0.14, which implies that the company has successfully managed its debt levels. In addition, the company appears to be able to avoid any short-term cash problems. During the quarter, the company took steps to place its snack business in a better position in the market by introducing new products and adding new distribution in key markets. As a result, snack sales improved 3%, finishing the year 11% higher than full-year fiscal 2007 results. Culinary sales grew 39% in the quarter and 1% for the full year compared to last year.