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.


Multi-Color Corporation ( LABL) tops the list. The company supplies decorative labels and packaging services to consumer product and food and beverage companies, retailers and container manufacturers. The company has been rated a buy since February 2006. Multi-Color displays significantly increased net income and notable stock price appreciation with good potential for further growth. The market expects EPS growth in Multi-Color's fiscal 2007. These strengths outweigh the company's low profit margins.


A buy since May 2005, Waste Industries USA ( WWIN) 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.


Rated a buy since May 2006, Chesapeake Utilities ( CPK) distributes, transmits and markets natural gas. The company's revenue growth has outpaced that of the industry, and net income growth has exceeded both that of its industry and the S&P 500. Though the stock has risen over the past year, with investors rewarding the company's earnings growth and other positive factors, the stock still presents considerable upside potential.

These strengths outweigh the company's somewhat disappointing return on equity.


EnergySouth ( ENSI) 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.

Though EnergySouth shows low profit margins, its overall financial strengths outweigh its weaknesses.


Rounding out the list is AAON ( AAON), a manufacturer of air-conditioning and heating equipment. The company 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 earnings per share growth, good cash flow from operations and solid stock price performance.

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

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