Hawkins, Balchem: Top 5 Small-Cap Stocks

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BOSTON (TheStreet) -- The following companies have market capitalizations between $50 million and $500 million and "buy" ratings from our quantitative model, which considers more than 60 factors. They're ordered by their potential to appreciate, starting with the company with the best growth prospects.

Hawkins(HWKN Quote) makes specialty chemicals.

The numbers: Fiscal first-quarter earnings grew 24% to $6.1 million, or 58 cents a share, as revenue increased 18% to $74 million. Its gross margin remained steady at 24% and its operating margin advanced from 12% to 13%. Hawkins has an ideal financial position with no debt and ample cash reserves, evident in its quick ratio of 2.8. We give the company a financial strength score of 8.9 out of 10, higher than the "buy"-list average.

The stock: Hawkins has increased 40% this year, outpacing major U.S. indices. The stock trades at a price-to-earnings ratio of 9, a vast discount to chemical peers and the overall market. The stock offers a 2.7% dividend yield.

American Physicians Service Group(AMPH Quote) provides liability insurance and investment management services to medical professionals.

The numbers: Second-quarter net income decreased 20% to $4.9 million, or 70 cents a share, as revenue declined 13% to $20 million. Its gross margin fell from 58% to 44% and its operating margin dropped from 51% to 38%. The company has an ideal financial position with $46 million of cash, compared to $6.5 million of debt. A debt-to-equity ratio of 0.1 reflects fiscal prudence.

The stock: American Physicians Service Group is up 7% this year, trailing behind major U.S. indices. The stock trades at a price-to-earnings ratio of 9, a vast discount to the market and insurance peers. The company doesn't pay dividends.