Each business day, TheStreet.com Ratings TheStreet.com Ratings compiles a list of the top five stocks in one of five categories -- fast-growth, all-around value, large-cap, mid-cap and small-cap -- 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.
American Physicians Service Group
is an insurance and financial services firm. Its subsidiaries and affiliates provide medical malpractice insurance, as well as brokerage and investment services to institutions and high net worth individuals. American Physicians Service has been
since May 2003. This rating is supported by several positive factors, including its largely solid financial position, notable return on equity, expanding profit margins, good cash flow from operations, and growth in earnings per share.
For the third quarter of fiscal 2008, the company reported that its EPS improved 35.6% year over year, rising from 73 cents to 99 cents. This continues a trend of positive EPS growth over the past two years. Return on equity improved slightly when compared to the same quarter one year prior, rising from 14.4% to 17%, while net operating cash flow increased significantly, rising 264.7% to $7.5 million. In addition, the company's debt-to-equity is very low at 0.06, implying there has been very successful management of debt levels.
Management acknowledged that the company's financial services business has been affected by overall market turmoil, but pointed out that it was able to achieve strong earnings and cash flow results while sticking with its conservative policies in regards to underwriting, reserving, and investing. The company was also able to work toward expanding its business during the quarter, with the number of policy holders increasing 6%. The company undertook cost-cutting measures and will continue to adjust its business in order achieve profitability. Although no company is perfect, we do not currently see any significant weaknesses that are likely to detract from American Physicians Service Group's generally positive outlook.
is a provider of information technology services and solutions to U.S. federal government agencies. The company focuses on designing, implementing, maintaining, and upgrading IT systems and networks. NCI has been
since February 2008 based on its healthy growth in revenue and net income, solid stock price performance, impressive record of EPS growth, and return on equity.
For the third quarter of fiscal 2008, the company reported revenue growth of 18.7% year over year. This growth represents record revenue results for the company, and appears to have trickled down to NCI's bottom line, improving EPS by 28%. EPS increased from 25 cents in the third quarter of fiscal 2007 to 32 cents in the most recent quarter. Net income also increased, rising 31.6% from $3.3 million to $4.4 million. Return on equity improved slightly from 16.2% to 16.6%. NCI's strong earnings growth has helped the stock price climb higher over the past year.
Management announced that it was pleased with what it considered excellent quarterly results and considers NCI well-placed in its markets and with its customers for fiscal 2009. The company is confident about its business model and plans to continue with its strategic plan of focusing on organic growth supplemented with strategic acquisitions that generate long-term, sustainable value. While an overall down market can negatively affect any stock, we feel that the company has good upside potential in any other market, despite the fact that it has already risen in the past year. In addition, we believe that the strengths detailed above outweigh the fact that the company shows low profit margins.
is the corporate parent of three community banks: Tompkins Trust Company, The Bank of Castile, and Mahopac National Bank. Its three banks primarily offer commercial banking services to individuals and businesses throughout New York state. We have
since October 2007 on the basis of its notable return on equity, expanding profit margins, increased revenue, and solid stock price performance.
For the fourth quarter of fiscal 2008, the company reported slight revenue growth of 3.3% year over year. However, a decline in EPS indicates that this increase did not trickle down to the company's bottom line, with EPS coming slightly below of that of the prior year's quarter. All the same, we feel that the company remains poised for higher earnings in the coming year, despite its somewhat volatile results of late. Return on equity improved somewhat during the quarter, rising from 13.4% to 13.7%, and as a result can be viewed as a modest strength for Tompkins Financial.
Management was pleased with the company's results for full year fiscal 2008 and expects the company to be in a strong position for success in fiscal 2009. While Tompkin Financial's stock is currently trading at a premium valuation compared to its peers, we feel that the company's strengths outweigh any potential weakness at this time.
Emergency Medical Services
( EMS) provides outsourced emergency department staffing and management services to hospitals under the brand EmCare and ambulance services in 40 states under the brand American Medical Response. We
in August 2008. Our rating is supported by the company's revenue and net income growth, impressive record of EPS growth, good cash flow from operations, and largely solid financial position.
EMSC reported results for its fourth quarter of fiscal 2008 on February 12. These results will be incorporated into our model soon, but our current rating is based on the company's third quarter results. For the third quarter of fiscal 2008, EMSC's revenue grew 28.2% year over year, greatly exceeding the industry average of 3.5%. This growth appears to have helped boost the company's EPS, which improved significantly from 34 cents in the year-ago period to 66 cents in the most recent quarter. The company has demonstrated a pattern of positive EPS growth over the past two years, and we feel that this trend is likely to continue in the future. In addition, net income increased by 95.1% when compared to the same quarter a year ago, rising from $14.7 million to $28.6 million. Net operating cash flow also increased significantly, rising 99.2% to $75.1 million. Furthermore, a high quick ratio of 1.9 demonstrates strong liquidity, despite the fact that a debt-to-equity ratio that is higher than the industry average indicates that EMSC's debt levels may need to be reevaluated.
Management stated that the company had an excellent quarter and would continue to expand its service offerings. EMSC updated its EPS guidance to an expected range of $1.90 to $2.00 per diluted share from previously announced guidance of $1.70 to $1.75 per diluted share. While the company shows low profit margins, we feel that the strengths detailed above outweigh any potential weakness at this time.
and its subsidiaries develop, manufacture, and market products dedicated to food and animal safety, such as diagnostic test kits and complementary products, such as dehydrated culture material. Our
for Neogen has not changed since February 2003. This rating is based on strengths like the company's revenue and net income growth, largely solid financial position, impressive record of EPS growth, and solid stock price performance.
For the second quarter of fiscal 2009, Neogen reported revenue growth that slightly outpaced the industry average, rising 14.6% year over year. This growth appears to have helped boost EPS, which improved 18.2% in the most recent quarter from 22 cents to 26 cents. Net income growth of 19.9% set a quarterly record for the company. The company has a debt-to-equity ratio of zero, as it has no debt to speak of; we consider this to be a relatively favorable sign of strength for the company. In addition, Neogen maintains a quick ratio of 2.9, which clearly indicates an ability to cover short-term cash needs.
Management stated that the state of the economy has impacted the company's results, but was clearly proud of the company's ability to find opportunities for growth despite the challenges. While Neogen's stock price has been driven to a premium compared to its industry over the past year, we feel that its strengths justify the higher price level at this time, despite the company's weak operating cash flow.
Our quantitative rating, which can be viewed for any stock through our stock screener stock rating screener, is based on a variety of historical fundamental and pricing data and represents our opinion of a stock's risk-adjusted performance relative to other stocks. However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could affect the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company. For those reasons, we believe that a rating alone cannot tell the whole story and that it should be part of an investor's overall research.