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.
Rated a buy since December 2005,
develops software and services for enterprise management and collaborative supply chains. Strong EPS growth over the past year has helped the company's stock price appreciate faster than the
Barring a major bear market, the stock should continue to move higher. The company has no debt to speak of, and it maintains a quick ratio that demonstrates the ability to cover short-term cash needs. While American Software may harbor some minor weaknesses, they are unlikely to have a significant impact on results.
provides onshore seismic data acquisition services to oil and gas companies. It has been rated a buy since August 2005. The company's revenue increased nearly 50% in the second quarter of 2007 compared with the same period last year, and it has no debt to speak of. Net income increased by 605.45% in that time frame, dwarfing the industry average.
Dawson has shown a pattern of EPS growth in the last two years, a trend that should continue. Powered by these strengths, Dawson's stock price has grown by 127.64% in the 12 months prior to Aug. 3, making it relatively expensive compared with others in its industry. TheStreet.com Ratings believes the company's strengths justify its higher price level.
Electronic-components maker Spectrum Control
has been rated buy since August 2005. The company reported robust revenue growth for the second quarter of 2007, coming in higher than the industry average of 3.0%. Spectrum Control has a solid financial position with reasonable debt levels, solid stock price performance, an impressive record of earnings-per-share growth and compelling growth in net income. These strengths outweigh the company's low profit margins.
Brewer of Sam Adams beer and other alcoholic drinks
has been rated a buy since August 2005. The company shows strong revenue growth and has no debt to speak of. It maintains a quick ratio of 2.75, which demonstrates the ability to cover short-term cash needs.
Boston Beer has shown a pattern of EPS growth over the past two years, a trend that should continue into the year ahead. This earnings strength has elevated the company's stock price to a level that somewhat expensive compared with the rest of its industry. Given its other strengths, the higher price level is justified. The positives also outweigh the company's weak operating cash flow.
CAM Commerce Solutions
( CADA), which makes integrated retailing and payment processing solutions, has been rated buy since August 2005. The company's stock price has performed solidly, and it has reported growth in revenue, net income and earnings per share.
Although the company may harbor some minor weaknesses, TheStreet.com Ratings feel they are unlikely to have a significant impact on results. CAM Commerce Solutions reported this month that fiscal third-quarter net income increased 85% to $1.3 million, or 30 cents a share, and revenue increased 26% to $8.5 million.