Top 5 Fast-Growth Stocks for Dec. 29

NCI, Inc. (NCIT Quote) is a provider of information technology (IT) services and solutions to U.S. federal government agencies. The company focuses on designing, implementing, maintaining, and upgrading IT systems and networks by leveraging its skills across four core service offerings: network engineering; information assurance; systems development and integration; and enterprise systems management. A majority of the company's revenue comes from the delivery of mission-critical IT services to defense and intelligence agencies. Approximately three-quarters of NCI's employees work at customers sites, which gives the company a unique perspective on its customers' missions and technical environment.

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 earnings per share (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 $0.25 in the third quarter of fiscal 2007 to $0.32 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 16.18% to 16.58%. 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.