Top 5 Small-Caps for Nov. 28

Management announced that it was pleased that its efforts to reduce operating expenses as a percentage of sales helped lead the company to a highly profitable second quarter. Looking ahead, PetMed Express plans to focus on capturing additional market share, as well as improving reorders and customer service levels. Although no company is perfect, we do not currently see any significant weaknesses that are likely to detract from the future financial performance of this company.

NCI(NCIT Quote) is a provider of information technology (IT) services and solutions to U.S. federal government agencies. NCI has been rated a buy since February 2008 based on its healthy growth in revenue and net income, solid stock price performance, impressive record of EPS growth, and return on equity.

For the third quarter of fiscal 2008, the company reported revenue growth of 18.7% year over year. This growth represents record revenue results for the company, and appears to have trickled down to NCI's bottom line, improving EPS by 28.0%. EPS increased from 25 cents in the third quarter of fiscal 2007 to 32 cents in the most recent quarter. Net income also increased, rising 31.6% from $3.34 million to $4.40 million. Return on equity improved slightly from 16.2% to 16.6%. NCI's strong earnings growth has helped the stock price climb higher over the past year.

Management announced that it was pleased with what it considered excellent quarterly results and considers NCI well-placed in its markets and with its customers for fiscal 2009. The company is confident about its business model and plans to continue with its strategic plan of focusing on organic growth supplemented with strategic acquisitions that generate long-term, sustainable value. While an overall down market can negatively affect any stock, we feel that the company has good upside potential in any other market, despite the fact that it has already risen in the past year. In addition, we believe that the strengths detailed above outweigh the fact that the company shows low profit margins.