Each weekday, TheStreet.com Ratings compiles a list of the top five stocks in five categories -- fast-growth, all-around value, large-cap, mid-cap and small-cap -- and publishes these lists in the Ratings section of our Web site.
This list, updated daily, is based on data from the close of the previous trading session. Today, small-cap stocks are in the spotlight. These are stocks of companies that have market capitalizations of between $50 million and $500 million that rank near the top of all stocks rated by our proprietary quantitative model, which looks at more than 60 factors.
The stocks must also be followed by at least one financial analyst who posts estimates on the Institutional Brokers' Estimate System. They are ordered by their potential to appreciate.
Note that no provision is made for off-balance-sheet assets such as unrealized appreciation/depreciation of investments, market value of real estate or contingent liabilities that might affect book value. This could be material for some companies with large underfunded pension plans.
Today begins with
, which provides corporate visual image solutions to the petroleum/convenience-store industry. It has been rated a buy since September 2005. The company's revenue growth outpaces the industry average, and it has no debt to speak of. LSI's net income increased by 56.3% in the fourth quarter of its fiscal 2007 compared with the same quarter one year ago, rising to $6.96 million from $4.45 million. These strengths outweigh the company's low profit margins.
operates as an independent commercial bank in California. It has been rated a buy since December 2005. The company's EPS increased by 23.4% in the second quarter compared with the same period last year, continuing a two-year pattern of positive EPS growth. Net income growth over the same period exceeded that of both the
and the commercial bank industry average, and return on equity improved slightly compared with the same quarter a year ago. With strengths like these, the lackluster performance in the stock itself is not cause for concern.
offers personal and commercial property and casualty lines of insurance to businesses and individuals. It has been rated a buy since September 2005. The company's debt-to-equity ratio of 0.09 is below that of the industry average, implying that there has been very successful management of debt levels. Net operating cash flow has increased 51.23% to $13.21 million in the second quarter compared with the same period last year. Donegal has demonstrated a pattern of positive EPS growth over the past two years. Given these strengths, the company's poor stock price performance is no cause for concern.
Brokerage and investment advisory services provider
American Physicians Service Group
has been rated a buy since September 2005. The company's strengths include revenue growth, a largely solid financial position with reasonable debt levels by most measures and a stock price that has increased by 9.52% in the 12 months prior to Sept. 27. While EPS has been declining over the past year, TheStreet.com Ratings anticipates that this trend will reverse going forward. These strengths outweigh the company's subpar net income growth.
( AXYS), which makes optical system components, has been rated a buy since August 2005. Axsys recently reported that second-quarter net income increased 47% over a year ago. Sales increased 28% to $49.2 million, driven by strong demand for infrared cameras and lens products. With the threat of terrorism across the world, the need for advanced technology to secure borders is growing. However, only a fraction of over 150,000 miles of international borders are equipped with the latest surveillance technology. This provides the company with huge business potential.
The buy rating is not risk-free. Axsys' success is largely dependent on its ability to anticipate and respond rapidly to changing technological developments in the industry. Moreover, a reduction or delay in the purchase of precision optical solutions by the U.S. government could have an impact on financial performance.