Jensen: Consider These Small-Cap Manufacturers

After last week's late-rally on comments by the European Central Bank (ECB) President Mario Draghi, It should be an interesting week in the market. I don't think the rally is sustainable because Europe is likely to remain a mess for the foreseeable future due to the current tepid domestic job and economic growth as well as an apparent slowdown in corporate profits.

Still, I think there will be many opportunities over the summer to buy on the dips. I particularly like equities that have limited analyst coverage. Right now, I have a couple of small-cap manufacturers on my radar that I plan to pick up on the next selloff. Both have been hurt by the overall negative sentiment in this space recently. These stocks are also cheap, have cash-rich balance sheets and either net insider buying over the last year and/or recent insider purchases.

Oplink Communications (OPLK) designs and manufactures optical networking components and subsystems worldwide

Four reasons OPLK is a good bargain at under $14 a share:

• Roughly two-thirds of the stock's market capitalization is represented by net cash on its balance sheet and the stock is priced at just 90% of book value.

• An insider made a $1.8 million buy in late May, which was the first insider purchase in 2012.

• The stock is selling at the bottom of its five-year valuation based on P/B, P/S and P/CF. The median price target by the five analysts who cover OPLK is around $22 a share, with price targets ranging from $19 to $33 a share.

• Revenue growth is predicted to return in fiscal-year 2013 with double-digit sales increases. The stock is also cheap, trading below 7x forward earnings (once you strip out net cash).

Hurco Companies (HURC) manufactures computerized machine tools worldwide.

Four reasons HURC is a solid value at $21 a share:

• The company has a robust balance sheet with about $38 million in net cash on the books (roughly 35% of its market capitalization).

• Insiders have been net buyers of the stock over the past year; the last purchases occurred in April.

• The market is discounting the company's growth prospects. Analysts expect between 8% and 12% revenue growth in fiscal-year 2012 and fiscal-year 2013. The stock sells for a five-year projected PEG of less than 1 (0.65).

• The shares are cheap, trading at just 9x forward earnings (6x if you strip out net cash). It also appears the stock has good technical support around the $20 level.

EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.