Top 5 Small-Cap Stocks for March 20

NVE(NVEC Quote) is a technology company that specializes in the development and sale of devices using spintronics, a nanotechnology that relies on electric spin to acquire, store, and transmit information. We have rated the company a buy since August 2006. Our rating is supported by the company's growth in revenue, net income, and EPS, as well as its efficiency, solvency, and solid stock price performance.

For the third quarter of fiscal 2009, NVE's revenue rose $23.50 year over year. This appears to have helped boost EPS, which improved 44.4% when compared to the third quarter of fiscal 2008. The company has demonstrated a pattern of positive EPS growth over the past two years, and we feel that this trend should continue going forward. Net income also increased significantly, rising 45% from $1.7 million to $2.5 million. NVE's debt-to-equity ratio is not currently a solid indicator of strength for the company, but its quick ratio of 4.9 is very high and indicates very strong liquidity.

The company announced that its third quarter net income was a record for the company, driven by increases in product sales and contract research and development revenue. Looking at the company's stock, its price is higher than it was a year ago. We believe that in most economic environments, this stock still has good upside potential. Although even the best stocks can fall in an overall down market, we do not currently see any significant weaknesses that are likely to detract from NVE's generally positive outlook.