Waste Industries, EnergySouth Lead Small-Caps

Waste Industries and EnergySouth top 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.

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.

A buy since May 2005,

Waste Industries USA


tops this week's list. The company provides solid waste collection, transfer, disposal and recycling services to commercial, industrial and residential customers in six states in the Southeast.

It demonstrates improved operating margins due to pricing initiatives, higher productivity gains and increased internalization of waste into its landfills. The company also completed acquisitions in South Carolina and Georgia that will boost hauling revenue and strengthen its routes in desired markets.

The solid waste industry is very competitive and requires considerable labor and capital resources, and it is subject to extensive federal, state and local environmental laws and regulations. For these reasons, any changes in the economic, legal and regulatory environment could hurt Waste Industries' future financial performance.



is a holding company concentrated on the purchase, distribution, storage and transportation of natural gas in southwest Alabama. It has been rated a buy since May 2005. The company's strengths include revenue growth that has outpaced the industry average and a pattern of EPS growth over the past year.

Its stock is expensive relative to its peers, but given its performance, the higher price is justified.


(AAON) - Get Report

, a manufacturer of air-conditioning and heating equipment, has been rated a buy since June 2005.

AAON's strengths can be seen in multiple areas, such as revenue growth, a largely solid financial position with reasonable debt levels by most measures, an impressive record of EPS growth over the past two years, good cash flow from operations and solid stock price performance.

The main risk to the buy rating is low profit margins.

Rated a buy since December 2005,

American Software

(AMSWA) - Get Report

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 exceed the

S&P 500

over the past year. And barring a major bear market, the stock should continue to move higher even though it has already enjoyed nice gains in the past year. The company has no debt to speak of, and 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.

Medtox Scientific


provides forensic and clinical laboratory services, and has been rated a buy since October 2005. The company has shown impressive stock price appreciation, net income growth that has significantly exceeded that of the S&P 500 and its industry, and strong earnings growth over the past two years.

Although no company is perfect, there are currently no significant weaknesses that are likely to detract from the generally positive outlook.