Each weekday, TheStreet.com Ratings compiles a list of the top 10 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.

Today we look at small-cap stocks. This list, updated daily, is based on data from the close of the previous trading session. 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 62 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.

Up first today is Tessco Technologies ( TESS), which provides support and services for businesses that use wireless, voice, data, fixed and in-building systems. The company's stock has been rated a buy since December 2004. Among the company's strengths include notable return on equity, good cash flow from operations, impressive stock-price performance and net income growth.

These strengths overcome the company's low profit margins and give it considerable upside potential.


Dynamex ( DDMX) provides same-day delivery and logistics services in the U.S. and Canada. It has been rated a buy since December 2004.

The company's strengths include its notable return on equity, revenue growth, solid financial position and reasonable debt levels. Dynamex also has had solid stock price performance and an impressive record of earnings-per-share growth. TheStreet.com Ratings believes these strengths outweigh the fact that the company shows low profit margins.


Riverview Bancorp ( RVSB), the parent company of Vancouver, Wash.-based Riverview Community Bank, has been rated a buy since December 2004.

The company's strengths include its strong return on equity, solid stock price performance, impressive record of EPS growth, robust revenue gains and expanding profit margins. Although the company may harbor some minor weaknesses, we believe it is unlikely to have a significant impact on results.


Oyo Geospace ( OYOG) designs, manufactures and sells seismic data equipment, and has had a buy rating since February 2006. The company shows a convergence of positive factors, including robust revenue growth, expanding profit margins, commendable return on equity and impressive EPS growth.

Even though the company's stock is trading at a premium valuation based on our review of its current price compared to earnings and book value, its sturdy financials deserve a sustained buy rating.


Atlantic Tele-Network ( ATNI), which provides telecommunications services in the Caribbean and North America, has been rated a buy since January 2005.

TheStreet.com Ratings' positive outlook on the stock is primarily influenced by the company's stellar revenue growth, reasonable debt levels and increased net income growth. Though the company may have a few minor weaknesses, they are unlikely to impact its results in the foreseeable future.


Multi-Color ( LABL) supplies decorative labels and packaging services to consumer product and food and beverage companies, retailers and container manufacturers in the U.S., Canada, Mexico, Central and South America. It has been rated a buy since February 2006.

The company's strengths include its solid stock price performance, an impressive record of EPS growth, compelling growth in net income, revenue growth and reasonable valuation levels. TheStreet.com Ratings believes these strengths outweigh the fact that the company shows weak operating cash flow.


EnergySouth ( ENSI), is a holding company that purchases, distributes, stores and transports natural gas in southwest Alabama, and has been rated a buy since December 2004. Its strengths include strong net income growth, a debt-to-equity ratio that is lower than the industry average, and steady revenue growth. Its stock price surged almost 47% in 2006, making it more expensive relative to its peers. But given its performance, the higher price is justified.

Though EnergySouth shows a weak operating cash flow, its solid financial position, notable return on equity and overall financial strength outweigh its weaknesses and merit a buy rating.


Cherokee ( CHKE) markets and licenses the Cherokee, Sideout and Carole Little brands -- as well as related trademarks and other brands it owns or represents -- for apparel, accessories, home furnishings and recreational products. It has been rated a buy since December 2004.

The company's strengths include notable return on equity, revenue growth, a largely solid financial position with reasonable debt levels by most measures, expanding profit margins and solid stock price performance. TheStreet.com Ratings feels these strengths outweigh the fact that the company shows weak operating cash flow.


Universal Electronics ( UEIC)develops software and builds wireless control devices for home entertainment equipment and the subscription broadcasting market. It has been rated a buy since February 2005.

The company's strengths include its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of EPS growth, solid stock price performance and notable return on equity. TheStreet.com Ratings believes these strengths outweigh the fact that the company shows weak operating cash flow.


With 10 full-service bank branches focused on California's Chinese-American population, Preferred Bank of Los Angeles ( PFBC) has earned a buy rating since December 2005. The company's stock outperforms the majority of stocks based on its steady EPS growth, positive increases in net income, compelling return on equity and solid stock performance.

The company's stock price soared 33.59% in 2006, making it relatively more expensive than its peers. However, Preferred Bank shows no glaring weaknesses and its strong financial performance justifies its higher price level.


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