Top 5 Stocks: Hawkins, American Physicians

TSC Ratings provides exclusive stock, ETF and mutual fund recommendations using proprietary tools. Our "safety first" approach aims to reduce risk while achieving performance on a total return basis.

The following small-cap companies have market values between $50 million and $500 million and receive "buy" ratings from our proprietary quantitative model, which considers more than 60 factors. They are ordered by their potential to appreciate.

Hawkins(HWKN Quote) blends and distributes bulk and specialty chemicals for water treatment, and industrial and pharmaceutical use.

The numbers: Fiscal fourth-quarter revenue ascended 32% to $68 million as net income surged 194% to $5.1 million and earnings per share climbed 182% to 48 cents. Operating margin increased to 11% and net margin jumped to 7.5%. The company has zero debt and ample liquidity, as reflected by a quick ratio of 2.1.

The stock: Hawkins has risen 43% in 2009, outperforming all major U.S. indexes. Yet the stock trades at a price-to-earnings ratio under 10, indicating a discount to the market. Hawkins pays a weak 0.3% dividend.

American Physicians Group(AMPH Quote) provides medical liability insurance for physicians and health-care providers in Texas. The company also has an investment arm that provides advice and asset management to institutions and wealthy individuals.

The numbers: First-quarter revenue fell 2% to $19 million as net income increased 40% to $4.7 million and earnings per share jumped 46% to 67 cents. Operating margin surged to 38% and net margin climbed to 25%. The company boasts a minuscule debt load and has ample liquidity, as reflected by $38 million of cash.

The stock: American Physicians Group is up 4% in 2009, outperforming the Dow and the S&P 500. The stock is affordable at a price-to-earnings ratio under 8, but offers a small 1.3% dividend yield.