Top 5 Small-Cap Stocks for March 6

For the second quarter of fiscal 2009, Neogen reported revenue growth that slightly outpaced the industry average, rising 14.6% year over year. This growth appears to have helped boost EPS, which improved 18.2% in the most recent quarter from 22 cents to 26 cents. Net income growth of 19.9% set a quarterly record for the company. The company has a debt-to-equity ratio of zero, as it has no debt to speak of; we consider this to be a relatively favorable sign of strength for the company. In addition, Neogen maintains a quick ratio of 2.9, which clearly indicates an ability to cover short-term cash needs.

Management stated that the state of the economy has impacted the company's results, but was clearly proud of the company's ability to find opportunities for growth despite the challenges. While Neogen's stock price has been driven to a premium compared to its industry over the past year, we feel that its strengths justify the higher price level at this time, despite the company's weak operating cash flow.

Our quantitative rating, which can be viewed for any stock through our stock screener stock rating screener, is based on a variety of historical fundamental and pricing data and represents our opinion of a stock's risk-adjusted performance relative to other stocks.

However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could affect the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company.

For those reasons, we believe that a rating alone cannot tell the whole story and that it should be part of an investor's overall research.

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