Each week, 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, last updated Nov. 9, 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
CAM Commerce Solutions
( CADA), which engages in the design, development, marketing, installation and servicing of integrated retailing and payment processing for brick-and-mortar and e-commerce businesses. It has been rated a buy since September 2005.
The company's earnings per share improved by 87.5% in the third quarter of 2007 compared with the same period last year, and it has no debt to speak of. CAM Commerce also saw third-quarter revenue increase by 25.5% over a year ago. Powered by its strong earnings growth and other important driving factors, this stock has gone up in the 12 months prior to Nov. 8.
Naturally, any stock can fall in a major bear market. However, in almost any other environment, this stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year. Although the company may harbor some minor weaknesses, they are unlikely to have a significant impact on results.
( AXYS), which makes optical system components, has been rated a buy since August 2005. With the threat of terrorism across the world, the need for advanced technology to secure borders is growing. However, only a fraction of more than 150,000 miles of international borders are equipped with the latest surveillance technology. This provides the company with huge business potential. Axsys' consistent focus on the core business combined with increasing global border security concerns should benefit the company, going forward.
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.
, which makes test kits for food and animal safety, has been rated a buy since September 2005. The company recently reported that first-quarter revenue increased 13% over a year ago to $22.9 million, while EPS improved by 19.3%. Neogen has demonstrated a pattern of EPS growth over the past two years, and this trend is expected to continue.
Net income increased by 25.1% to $3.01 million in the fiscal first quarter compared with the same period last year. The company has no debt to speak of, and it maintains a quick ratio of 2.64, which clearly demonstrates the ability to cover short-term cash needs. Investors have apparently begun to recognize these positive factors, which has helped drive up the company's shares by a sharp 100.14% over the past year.
Although almost any stock can fall in a broad market decline, Neogen should continue to move higher even though it has already enjoyed a very nice gain in the past year. And though no company is perfect, currently TheStreet.com Ratings does not see any significant weaknesses that are likely to detract from the generally positive outlook.
( ACTU) provides software and services for business intelligence, performance management and reporting applications. It has been rated a buy since September 2006.
The company's strengths are seen in multiple areas, including its solid stock price performance, compelling growth in net income and largely solid financial position with reasonable debt levels by most measures. These strengths should outweigh the company's weak operating cash flow.
Actuate's stable EPS over the past year indicates that the company has sound management over its earnings and share float, and TheStreet.com Ratings believes these figures will begin to experience more growth in the coming year. Although no company is perfect, Actuate does not currently demonstrate any significant weaknesses that are likely to detract from the generally positive outlook.
Brokerage and investment advisory services provider
American Physicians Service Group
has been rated a buy since November 2005. The company's strengths include revenue growth, a largely solid financial position with reasonable debt levels and a solid stock price performance. These strengths should outweigh the company's somewhat disappointing return on equity.
Third-quarter earnings came to $5.3 million, or 73 cents a share, up from $409,000, or 14 cents a share, a year ago. Revenue totaled $22.8 million, up from $7.1 million a year ago.
The company's stock has risen over the last year, and, while other factors played a role, strong earnings growth was key. Although the best stocks can fall in an overall down market, in any other environment this stock still has good upside potential despite the fact that it has already risen in the past year. Stocks in the capital markets group are highly sensitive to interest rate changes, equity market performance and the general health of the economy since all these factors influence financial performance.