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TheStreet Open House

Three Small-Cap Stocks Upgraded to 'Buy'

Stocks in this article: BGGCYMIMCRL

BOSTON ( TheStreet) -- Small-cap stocks Briggs & Stratton (BGG), Cymer (CYMI) and Micrel (MCRL) were upgraded by TheStreet's stock model.

3. The model upgraded Briggs & Stratton, a maker of lawn-mower and other outdoor engines, to "buy."

Quarter: Fiscal third-quarter profit declined 5.3% to $24 million, or 48 cents, as revenue grew 3.1%. The operating margin expanded from 6.5% to 10%. Briggs & Stratton has $28 million of cash and $348 million of debt, equaling a debt-to-equity ratio of 0.5.

Stock: Briggs & Stratton has advanced 63% during the past year, outperforming stock-market indices. It trades at a price-to-book ratio of 1.6 and a price-to-sales ratio of 0.6, 51% and 59% discounts to peer averages. It's also cheap based on cash flow.

Consensus: Of analysts covering Briggs & Stratton, three advise purchasing its shares, two recommend holding and one suggests selling them. Hudson Securities expects the stock to gain 16% to $27. William Baird believes it will hit $26.

2. The model upgraded Cymer, a designer of equipment for semiconductor manufacturers, to "buy."

Quarter: Cymer swung to a first-quarter profit of $16 million, or 53 cents, from a loss of $11 million, or 39 cents, a year earlier. Revenue doubled to $114 million. The operating margin turned positive. Cymer holds $172 million of cash and no debt.

Stock: Cymer has risen 31% during the past 12 months, less than stock-market benchmarks. It sells for a PEG ratio, a measure of value relative to expected growth, of 0.1. A ratio below 1 implies a bargain. It's also cheap based on projected earnings.

Consensus: Of researchers following Cymer, six, or 67%, rate its stock "buy" and three rate it "hold." Barclays (BCS) projects a share price of $50, leaving a potential 37% return. Stifel Financial (SF) predicts that it will climb 26% to $46.

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