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 .

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

Up first today is Preferred Bank ( PFBC), which has 10 full-service branches focused on California's large Chinese-American population. The company's stock has earned a buy rating since December 2005. The stock should outperform most stocks we rate on the basis of its steady EPS growth, positive increases in net income, compelling return on equity and solid stock performance.

The stock is relatively more expensive than its peers. However, Preferred Bank shows no glaring weaknesses, and its strong financial performance justifies its higher price level.


Riverview Bancorp ( RVSB), the parent company of Vancouver-based Riverview Community Bank, has been rated a buy since December 2004. The company's strengths include its notable return on equity, solid stock performance, impressive record of EPS growth and expanding profit margins.

Although the company may harbor some minor weaknesses, we feel they are 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 has several positive qualities, including robust revenue growth, expanding profit margins, solid return on equity and a notable record of EPS growth.

The net income growth for Oyo has significantly exceeded that of the electronic equipment and instruments industry average, but is less than that of the S&P 500. The company's gross profit margin is strong, as is net profit margin, which significantly outperformed the industry average. Even though the company's stock is trading at a premium valuation, its sturdy financials deserve a sustained buy rating.


Tessco Technologies ( TESS) is a distributor of wireless products. It has been rated a buy since December 2004. Among the company's strengths are notable return on equity, good cash flow from operations, impressive stock performance and net income growth. Investors have apparently begun to recognize these positive factors, as the stock has been outpacing the S&P 500 over the past year.

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


Layne Christensen ( LAYN) provides drilling services and products to four principal markets: water resources, mineral exploration, geoconstruction and energy. It has carried a buy rating since January 2005. The company has enjoyed strong net income growth, compelling stock performance, solid revenue and a sharp increase in EPS. Layne's strengths outweigh the fact that the company shows low profit margins.


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 affect its results in the foreseeable future.


EnergySouth ( ENSI), a holding company concentrated on the purchase, distribution, storage and transportation of natural gas in southwest Alabama, has been rated a buy since December 2004. Its strengths include strong net income growth, a debt-to-equity ratio beneath that of the industry average, and remarkable stock growth. Its stock surged in 2006, making it more expensive relative to its peers, but given its performance, the higher price is justified.

Though EnergySouth shows a poor operating cash flow, its overall financial strengths outweigh its weaknesses, and the stock merits a buy rating.


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 revenue growth has slightly outpaced the industry average, and it appears to have trickled down to the company's bottom line, improving the earnings per share. Dynamex's debt-to-equity ratio is very low at 0.05 and is currently below the industry average, implying that there has been very successful management of debt levels.

These strengths outweigh the fact that the company shows low profit margins.


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 family apparel, fashion accessories and footwear, home furnishings and recreational products. It has been rated a buy since December 2004.

The company's strengths include notable return on equity, a largely solid financial position with reasonable debt levels by most measures, expanding profit margins and solid stock performance. These strengths outweigh the company's weak operating cash flow.


Buffalo Wild Wings ( BWLD), which owns, operates and franchises Buffalo Wild Wings Bar & Grill restaurants, has been rated a buy since November 2006.

The company's strengths include its robust revenue growth, largely solid financial position with reasonable debt levels, good stock performance, an impressive record of EPS growth and compelling growth in net income.

These strengths outweigh the fact that the company shows low profit margins.


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