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.
Today begins with
, which supplies lighting fixtures and graphics elements for applications in the retail, specialty niche and commercial markets. It has been rated a buy since August 2005. The company's revenue growth outpaces the industry average, and its debt-to-equity ratio of 0.04 is also better than that of its industry, implying that there has been very successful management of debt levels. LSI's net income increased by 36.6% in the third quarter of its fiscal 2007 when compared with the same quarter one year ago, rising to $3.30 million from $2.42 million.
, a clinical lab-testing company, has been rated a buy since September 2005. The company enjoys a healthy cash position, with robust revenue growth and improvement in profit and earnings per share. The company said third-quarter revenue increased 34.5% to $65.96 million, due to a 22.0% increase in patient count and an 11.0% rise in net revenue per patient due to higher reimbursements for esoteric testing. Net income rose 13.9% to $4.19 million, or 30 cents a share. Downside risks include a failure to realize its expansion strategy, a declining gross margin and a disappointing return on equity.
, brewer of Sam Adams 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, and TheStreet.com Ratings expects this to continue into the year ahead. The company's earnings strength has elevated its stock price to a level that is 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) 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 August 2005. The company's EPS improved by 100% in the second quarter of 2007 compared with the same period last year, and it has no debt to speak of. Although the company may harbor some minor weaknesses, they are unlikely to have a significant impact on results.
operates as an independent commercial bank in California. It has been rated a buy since December 2005. The company's EPS increased by 23.4% in the second quarter compared with the same period last year, continuing a two-year pattern of positive EPS growth. Net income growth over the same period exceeded that of both the
and the commercial bank industry average, and return on equity improved slightly compared with the same quarter a year ago. With strengths like these, the lackluster performance in the stock itself is not cause for concern.