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.

Exponent ( EXPO) is a science and engineering consulting firm whose multidisciplinary team of scientists, physicians, engineers, and business and regulatory consultants brings together more than 70 different technical disciplines to solve complicated issues facing industry and businesses. Its professional staff can perform in-depth scientific research and analysis or very rapid-response evaluations to provide clients with the critical information they need.

Exponent has been rated a buy since November 2001. An impressive record of earnings per share growth and compelling growth in net income are among several of the company's strengths. For the first quarter of fiscal 2008, revenue rose by 15.1% year over year. Net income for the same period increased by 25.6%, from $5.06 million a year ago to $6.35 million. Exponent reported that earnings per share improved 29.0% from 31 cents in the first quarter of 2007 to 40 cents in the most recent quarter. In fact, the company has demonstrated a pattern of positive EPS growth over the past two years. Finally, return on equity improved slightly when compared to the same quarter one year prior.

Driven by important factors such as strong earnings growth of 29.03%, this stock has surged 57.75% over the past year. We feel that Exponent should continue to climb despite its already impressive performance. The company believes that it remains well positioned to capture new opportunities for growth as it moves further into fiscal 2008. For the full year, management expects to report high single-digit to low double-digit growth in revenue as a result of the company's plans to pursue strategic opportunities. However, Exponent's future results could be negatively impacted by any disruptive changes in both general and industry-specific economic conditions and the effects of tort reform and government regulation of the company's business.

Balchem ( BCPC) develops, manufactures and markets specialty performance ingredients and products for the food, feed and mechanical sterilization industries. Balchem produces choline products for both human and animal consumption. Choline, a vitamin-B complex, plays a vital role in the metabolism of fat and the building and maintaining of cell structures. Choline deficiency can result in reduced growth and perosis (a disease characterized by a deformity of the leg joint) in poultry, and fatty liver, kidney necrosis and general poor health in swine, among other symptoms. In humans, choline is recognized as playing a key role in the structural integrity of cell membranes, the processing of dietary fat, reproductive development, and neural functions such as memory and muscle function.

Balchem also produces encapsulated performance ingredients for use throughout the food and animal-health industries in end products such as baked goods, refrigerated and frozen dough, processed meats, seasoning blends, and confections. These performance ingredients are used to enhance nutritional fortification and improve shelf life of prepared products.

Our buy rating for Balchem has not changed since June 2003. The company's strengths can be seen in such areas as its impressive revenue growth, solid stock price performance, and net income growth. For the fourth quarter of fiscal 2007, revenue leaped 106.0% year over year. This growth appears to have trickled down to the company's bottom line, improving earnings per share, as the company reported 26.9% growth in EPS in the most recent quarter. Net income also increased by 29.3% when compared to the fourth quarter of 2006, rising from $3.21 million to $4.16 million. Powered by its strong earnings growth and other driving factors, this stock has surged 27.8% over the past year.

For fiscal 2007, management was pleased with the integrations of two earlier acquisitions, Chinook and Akzo, and expects those acquisitions to continue to contribute positively to Balchem's earnings. However, management also expects rising raw material costs to be a challenge in the near term. While the company has taken pricing steps to counteract the effects of these increased input costs, such actions in the fourth quarter were not enough to offset them completely. Additional price increases were made effective in January 2008, and management therefore expects fiscal 2008 to see continuing improvements in sales and earnings, while cautioning that global economic issues could affect the company's results.

Pericom Semiconductor ( PSEM) designs, develops and markets high-performance interface integrated circuits and frequency control products used in advanced electronic systems. Interface ICs transfer, route and time electrical signals among a system's microprocessor, memory and various peripherals and between interconnected systems. FCPs are electronic components used as time and frequency clocks in electronic products ranging from computers and telecommunications switching equipment to cell phones and televisions. Pericom's interface products increase system bandwidth.

We have rated Pericom a buy since February 2007. The company reported that its earnings for the third quarter of fiscal 2008 surged 58.4% year over year, bolstered by strong demand for its products. Total revenue for the quarter climbed 36.4% to $41.18 million, aided by strong demand for products used in digital video high-performance PCs and servers, compared to $30.18 million in the prior-year quarter. Net income for the quarter increased to $4.14 million, or 16 cents per share, from $2.61 million, or 10 cents per share, in the third quarter of 2007.

The company expanded its Digital Video solutions by launching two new switches that allow next generation computing platforms using dual-function graphics ports to be switched between either of the high speed protocols. Pericom also launched three new signal conditioning products and expanded its Timing portfolio.

Looking ahead, management expects revenue for the fourth quarter of fiscal 2008 to be in the range of $42.00 million to $43.20 million, with gross margin expected to be in the range of 36.8% to 37.8%. In addition, the company expects its operating expenses to be between $10.80 million and $11.00 million. However, weak demand for semiconductors, higher stock option expenses, and the highly competitive market could restrict Pericom's future growth.

CAM Commerce ( CADA) designs, markets, installs and services a variety of software, hardware and other technical systems for retailers. The company offers retailing systems consisting of software, hardware, installation, training, technical support services and Web hosting services to both traditional and Web retailers. CAM Commerce also offers comprehensive payment processing solutions and services that integrate with its retailing systems and those of other suppliers.

Our buy rating, in place since February 2006, is based on positive investment measures such as the company's strong revenue growth, solid financial position and stock performance, and its growth in net income. Revenue rose by 23.1% year over year in the second quarter of fiscal 2008, and this growth appears to have helped boost earnings per share to 32 cents from 20 cents a year ago.

CAM Commerce has no debt to speak of, giving it a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Net income increased by 60.0% when compared to the same quarter one year prior, rising from $0.85 million to $1.37 million. The company declared a quarterly cash dividend of 31 cents per outstanding share to be paid on July 14, 2008, continuing its "earnings based" dividend plan that aims to pay out 75% or more of net profit each quarter.

Powered by its strong earnings growth of 60.00% during the second quarter, the price of this stock has risen 31.21% over the past year. We believe CAM Commerce's stock should continue to benefit from this trend and move even higher. Bear in mind, however, that even the most promising stocks are subject to broad market declines.

Air Methods ( AIRM) is an air ambulance service, providing air medical emergency transport services and systems throughout the United States. The company has two separate operating models: the Community-Based Model, or independent provider operations, with aircraft that are typically based at fire stations or airports, and the Hospital-Based Model, in which the company provides hospital clients with medically equipped helicopters and airplanes that are generally based at hospitals and staffed by hospital medical personnel.

In addition, the company's technical services group performs non-destructive component testing, engine repair, and component overhaul, while its products division designs, manufactures and installs aircraft medical interiors and other aerospace or medical transport products. Air Methods transports more than 84,000 patients annually using a fleet of more than 340 helicopters and fixed-wing aircraft. The company is headquartered in Englewood, Colo.

Air Methods has been rated a buy since June 2006, based on a few notable strengths. The company reported very impressive revenue growth of 58.3% year over year in the fourth quarter of fiscal 2007. A large portion of the revenue increase was attributed to revenue generated from bases added as a result of the acquisition of the parent company of CJ Systems Aviation Group (CJ) in October 2007.

Air Methods also reported significant earnings per share improvement, with EPS rising to 38 cents from 10 cents a year ago. Net income increased by 301.6%, rising from $1.20 million in the fourth quarter of fiscal 2006 to $4.82 million.

Weather conditions during the early months of fiscal 2008 have impacted transport volume, but management remains optimistic that the company will achieve healthy earnings growth throughout the year. However, Air Methods' future results could be negatively impacted by any failure to fully integrate CJ into the company's operations.

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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