TheStreet.com Ratings: Top 5 Small-Cap Stocks

EnergySouth, Martin Midstream and Tessco Technologies head up this week's list of top-rated companies.
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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 TheStreet.com Ratings' proprietary quantitative model, which looks at more than 60 factors.

In addition, the stocks must be followed by at least one financial analyst who posts estimates on the Institutional Brokers' Estimate System. The stocks are ordered by their potential to appreciate.

Up first today is

EnergySouth

(ENSI)

, a holding company concentrated on the purchase, distribution, storage and transportation of natural gas in southwest Alabama. EnergySouth has been rated a buy since March 2005. Its strengths include strong net operating cash flow, a reasonable debt-to-equity ratio beneath that of the industry average and remarkable stock price growth. Its stock is expensive relative to its peers, but given its performance, the higher price is justified.

Though EnergySouth shows a somewhat disappointing return on equity, its overall financial strengths outweigh its weaknesses, and the stock merits a buy rating.

Martin Midstream

(MMLP) - Get Report

, rated a buy since June 2005, provides marine transportation, terminalling, distribution and midstream logistical services for producers and suppliers of hydrocarbon products and by-products. The company shows impressive revenue growth, significantly increased net operating cash flow and strong stock price performance.

These positives outweigh Martin Midstream's subpar growth in net income.

Tessco Technologies

(TESS) - Get Report

is a distributor of wireless products. It has been rated a buy since March 2005. The company's strengths include a steady pattern of EPS growth, good cash flow from operations, impressive stock performance and robust revenue growth.

These strengths outweigh Tessco's low profit margins.

Oyo Geospace

(OYOG)

, which designs, manufactures and sells seismic data equipment, has had a buy rating since February 2006. The company has several positive qualities, including robust revenue growth, expanding profit margins, solid return on equity and notable operating cash flow increases.

Although no company is without its minor weaknesses, Oyo displays no sign that its positive performance will slow.

Property and casualty insurance provider

Meadowbrook Insurance Group

(MIG)

has been rated a buy since March 2005. The company has demonstrated a pattern of positive EPS growth over the past two years, has improved its return on equity and has enjoyed a significant increase in its stock price.