Each business day, 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 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.

CAM Commerce Solutions ( CADA) provides a variety of software and hardware technical systems for retailers. Our buy rating, in place since February 2006, is based on positive investment measures such as strong revenue growth, solid financial position and stock performance, and growth in net income.

Powered by its strong earnings growth of 70% during the first quarter of 2008, this stock has surged 64% over the past year. Revenue rose 37% year over year in the first quarter. CAM Commerce Solutions has no debt to speak of, giving it a debt-to-equity ratio of zero, a relatively favorable sign. Net income increased 75% from the year-ago quarter.

Finally, the company has demonstrated an impressive pattern of positive earnings per share growth over the past two years. Looking forward, we feel that this trend should continue.

Axsys Technologies ( AXYS) designs and manufactures precision optical solutions for use by the U.S. government and high-performance commercial markets. Axsys also distributes precision ball bearings used in a variety of industrial and commercial applications. The company's corporate offices are located in Connecticut, with design and manufacturing facilities located in a number of other states.

We have rated Axsys a buy since November 2005. In the fourth quarter of 2007, the company recorded strong financial performance, with strong demand for both Axsys' traditional business and the recently acquired gyro-stabilized gimbal business helping generate revenues of $47.9 million, vs. $33.8 million in 2006. The company reports that its backlog increased 21% to a record $140 million since the year-ago quarter. This increase was due to strong demand for infrared cameras and lenses, gimbal systems, and military-grade motion control systems.

Looking ahead to 2008, management now expects full-year sales in the range of $208 million to $212 million, up from the previously forecast range of $193 million to $197 million. Management also expects EPS in the range of $1.70 to $1.75, compared with previous guidance of $1.57 to $1.60. However, any significant reduction or delay in purchase of the company's products by the U.S. government could have an adverse effect on Axsys' financial performance, as the company derives a significant portion of its revenue from this source.

Atlantic Tele-Network ( ATNI) is a telecommunications company providing wireless and wire line services in the Caribbean and North America. The company offers wireless voice and data services to retail customers in Guyana and Bermuda. In the U.S., it offers wholesale wireless voice and data roaming services to national, regional, and local wireless carriers in rural markets. These U.S. markets are primarily in Arizona, Colorado, Illinois, Missouri, and New Mexico.

Atlantic Tele-Network has been rated a buy since November 2001. The company displayed strong financial results in the third quarter of 2007. Driven by strong performance across businesses, especially in Guyana, revenue increased 14% year over year to $46.96 million. Net income grew at a rate of 24% to $9.4 million, benefitting from market expansion, reduced interest expense, and a lower effective tax rate. The company's subscriber base surged 26% to 330,000. Finally, the stock provided an attractive quarterly dividend of 16 cents a share, which translates into a solid dividend yield at the current price level.

We feel that the company's strong fundamentals and strategy of focusing on underserved markets should help sustain growth in the future. However, the termination of Atlantic Tele-Network's exclusive right to provide wire line local and long distance telephone services in Guyana could affect future results, as could any adverse developments in regulatory and economic conditions.

EnergySouth ( ENSI) is a holding company in the gas utilities sector. Through its subsidiaries Mobile Gas Service and Southern Gas Transmission, the company distributes natural gas to residential, commercial and industrial customers in southwest Alabama. The company also provides underground natural gas storage services and transportation services through Bay Gas Storage Company. EnergySouth is also engaged in gas marketing, merchandising, and other energy-related services.

EnergySouth has been rated a buy since February 2006. Its solid stock price performance is its primary strength. Shares have jumped 49% in the past year. While the sharp appreciation made the stock somewhat expensive compared to its peers, we feel that the price is still justified at this time.

Although many of the company's financials were down in the most recent quarter, this has historically been a very steady natural gas stock. According to management, the decrease in earnings was due primarily to increased operating expenses incurred as a result of the EnergySouth's continuing expansion of midstream operations. Increased revenues from short-term storage agreements and a decrease in net interest expense partially offset the increases in expense. The Board of Directors declared a quarterly dividend on common stock of a quarter a share.

Key Technology ( KTEC) designs, manufactures, sells and services process automation systems that integrate electro-optical inspection and sorting, specialized conveying, and product preparation equipment. Automated inspection systems are used to detect and eliminate defects, most often during the processing of raw and semi-finished products.

Key Technology has been rated a buy since February 2007. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position and increase in net income. For the fourth quarter of 2007, the company's revenue rose 31% year over year. Net income increased 495% to $2.4 million from a deficit of $580,000. Key Technology currently has a debt-to-equity ratio of zero.

The recent surge in commodity costs is a challenge to the machinery industry. This could affect Key Technology's results in the future.

Our quantitative rating is based on a variety of historical fundamental and pricing data and represents our opinion of a stock's risk-adjusted performance relative to other stocks.

However, the rating does not incorporate all of the factors that can alter a stock's performance. For example, it doesn't always factor in recent corporate or industry events that could affect the stock price, nor does it include recent technology developments and competitive dynamics that may affect the company.

For those reasons, we believe that a rating alone cannot tell the whole story and that it should be part of an investor's overall research.

This article was written by a staff member of TheStreet.com Ratings.

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