Small-Cap Companies That Beat Stock Market

BOSTON (TheStreet) -- These small-cap stocks were upgraded by TheStreet's equity model. Each has a small Wall Street following and has outperformed the U.S. stock market in 2010.

3. The model upgraded manufacturer and service provider Benchmark Electronics(BHE) to "buy." Benchmark has appreciated 12% in 2010.

Quarter: Benchmark swung to a fourth-quarter profit of $17 million, or 26 cents a share, from a loss of $204 million, or $3.13, a year earlier. Revenue ascended 3.2% to $600 million. The operating margin inched up from 3.1% to 3.5%. Benchmark holds $421 million of cash and $12 million of debt.

Stock: Benchmark has soared 66% during the past year. The stock trades at a price-to-projected-earnings ratio of 15, a price-to-book ratio of 1.3 and a price-to-sales ratio of 0.7, 29%, 46% and 72% discounts to peer-group averages. It's also cheap based on sales per share.

Holders: No sell-side analysts cover Benchmark, which has a market value of $1.4 billion. During the fourth quarter, five of its 10 largest shareholders, including Bank of America(BAC), decreased their holdings, while four, including State Street(STT), amplified their bets. One top holder retained the size of its position.

2. The model upgraded Community Trust Bancorp(CTBI), focused on Kentucky and West Virginia, to "buy." Community Trust Bancorp has rallied 20% in 2010.

Quarter: Fourth-quarter profit expanded 7.3% to $7 million, or 46 cents, as revenue climbed 4.9%. The operating margin extended from 30% to 38%. Community Trust Bancorp holds $142 million of cash and $275 million of debt, translating to a debt-to-equity ratio of 0.9.

Stock: Community Trust has declined 0.2% during the past year, underperforming benchmarks. It sells for a price-to-projected-earnings ratio of 15 and a price-to-cash-flow ratio of 12, 19% and 18% discounts to peer-group averages. It's fairly valued based on book value.

Consensus: Of analysts covering Community Trust, two advise purchasing its shares and two recommend holding them. Sandler O'Neill expects the stock to advance 6% to $31. Hilliard Lyons believes it was fully valued at $28. The stock pays a 4.1% dividend yield.