Top 5 Small-Caps for Nov. 28

Based on its fourth quarter and full-year fiscal 2008 results, the company released guidance for the year ahead. Management anticipates full-year EPS in the range of $1.20 to $1.27, with net sales expected to be between $585 million and $615 million. Although the company shows low profit margins, we feel that the strengths detailed above outweigh any potential weakness exhibited by Diamond at this time.

PetMed Express(PETS Quote), which does business as 1-800-PetMeds, markets and sells prescription and nonprescription pet medications, along with other health products for dogs, cats and horses. We have rated PetMed Express a buy since November 2004 due to such strengths as its solid stock price performance, growth in net income and revenue, and largely solid financial position.

The company announced on Oct. 20 that its revenue rose 15.6% year over year in the second quarter of fiscal 2008. This growth helped lead to EPS growth of 38.9% when compared to the same quarter last year. The company has, in fact, demonstrated a pattern of positive EPS growth over the past two years, and we feel that this trend should continue. Net income also improved in the second quarter, rising 28.6% from $4.5 million in the second quarter of fiscal 2007 to $5.8 million in the most recent quarter. Strong earnings growth was key to helping drive the stock price higher over the last year, although other factors naturally played a role, as well. In addition, PetMed Express has no debt to speak of and a quick ratio of 5.5, factors which indicate the successful management of debt levels and the ability to cover short-term cash needs.