TheStreet.com Ratings: Top Five Small-Cap Stocks - TheStreet

TheStreet.com Ratings: Top Five Small-Cap Stocks

Martin Midstream and EnergySouth lead off 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 our 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.

Today's list begins with

Martin Midstream

(MMLP) - Get Report

, which provides marine transportation, terminalling, distribution and midstream logistical services for producers and suppliers of hydrocarbon products and byproducts. It has been rated a buy since June 2005.

The company shows impressive revenue growth, significantly increased net operating cash flow and strong stock price performance. These positives outweigh concern about Martin Midstream's growth in net income.

EnergySouth

(ENSI)

is 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.

Cherokee

(CHKE)

markets and licenses the Cherokee, Sideout and Carole Little brands -- as well as related trademarks and other brands -- for family apparel, fashion accessories and footwear, home furnishings and recreational products. It has been rated a buy since March 2005.

The company's strengths include notable return on equity, a largely solid financial position with reasonable debt levels by most measures and expanding return on equity. It is poised for EPS growth in the upcoming year.

These strengths outweigh the company's weak operating cash flow.

Rated a buy since March 2005,

Exponent

(EXPO) - Get Report

provides engineering and scientific consulting services involved in product development and product recall, among other related areas. The company has shown impressive stock price appreciation, stable EPS over the past year with growth predicted in the upcoming 12 months and improved return on equity. These strengths outweigh the company's low profit margins.

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.