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.

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.

Our buy rating for Balchem has not changed since June 2003. The company again reported record quarterly results in net sales for the second quarter of fiscal 2008, achieving a 41.8% increase year over year due to both organic and acquisition growth. Balchem also reported record net earnings, which increased 16.2% when compared with the second quarter of fiscal 2007.

As a result, the company's net earnings per diluted common share increased 13.6% to 25 cents per share from 22 cents per share in the second quarter of fiscal 2007. Additionally, Balchem reported that its balance sheet ratios and cash flow continued to be strong in the second quarter.

Management was pleased with the company's record results in the second quarter despite a difficult business environment. The company has worked to increase its global presence, and overseas demand has helped offset the challenges of the U.S. market. Balchem expects rising raw-material costs to continue affecting its financial results in the near term, but management stated that appropriate steps would be taken to minimize the impact on operating margins and cash flow. Bear in mind, however, that global economic issues could still affect the company's results.

Integral Systems ( ISYS) builds satellite ground systems and equipment for command and control, integration and testing, data processing and simulation. Founded in 1982, the company supports satellite missions for communications, science, meteorological and Earth resource applications.

Integral Systems has been rated a buy since March 2005. For the third quarter of fiscal 2008, revenue improved 16.5% year over year, climbing to $41.8 million. Income from operations was reported as $7.1 million for the third quarter, compared with $5.3 million in the same quarter last year. The company also reported net income of $4.7 million, or 55 cents per diluted share, an increase from $3.8 million, or 34 cents per diluted share, reported in the third quarter of fiscal 2007.

During the third quarter, both gross profit and operating income grew significantly in the space communications systems and government ground systems segments. The company has experienced a 34.2% increase in its year-to-date revenue when compared with the same period last year.

Management feels that the third quarter results reflect a solid financial performance and growth in the above-mentioned segments. Significant momentum and financial resources are expected to allow the company to focus on strategic growth initiatives going into the fourth quarter and the start of the next fiscal year. The company expects that such initiatives will continue to drive value for its shareholders. Earnings projections for fiscal 2008 were raised to about $2.15 per share.

Northwest Pipe ( NWPX) is a North American manufacturer of large-diameter, high-pressure steel pipeline systems for use in water infrastructure applications, primarily related to drinking water systems, as well as for hydroelectric power systems, wastewater systems and other applications.

We have rated Northwest Pipe Company a buy since July 2006. The company's strengths can be seen in multiple areas, such as its compelling growth in revenue, net income and earnings per share, solid stock price performance, and largely solid financial position with reasonable debt levels.

On July 23, the company reported that its earnings for the second quarter of fiscal year 2008 jumped 48.3% from the same quarter of fiscal 2007. Northwest Pipe reported revenue growth of 10.0% year over year to $112.11 million from $101.90 million. Net income grew to $8.40 million or 90 cents per share in the quarter, from $5.66 million or 61 cents per share in the second quarter of fiscal 2007.

The company's backlog at the end of the quarter was at an all-time high of $264.00 million, and according to management, the market continues to look very active over the balance of 2008. Management continues to expect the second half of the year to be very strong on the basis of the company's backlog and current manufacturing schedules, and expects the water transmission group's production and revenue to be somewhat better in the second half of the year.

Additionally, management expects the gross margin percentage in this group to stay at about the same level as the most recently reported quarter. However, management cited the current condition of the economy and rising steel and fuel costs as risk factors going forward and said it believes steel and fuel costs are likely to remain at elevated levels but unlikely to increase significantly over the next several months. While the company does not expect any significant downturns in the segments it serves, changes in the aforementioned assumptions could negatively affect its results.

American Physicians Service Group ( AMPH) is an insurance and financial services firm. Its subsidiaries and affiliates provide medical malpractice insurance, as well as brokerage and investment services to institutions and high-net-worth individuals.

American Physicians Service has been rated a buy since May 2003. While the company reported year over year declines in revenue and net earnings for the second quarter of fiscal 2008, it is important to bear in mind that its 2007 results included an extraordinary gain of $2.26 million in the second quarter from the acquisition of American Physicians Insurance, its medical malpractice subsidiary.

Management indicated that the results from that subsidiary continue to be excellent and that the company exceeded the analysts' consensus estimate for the most recent quarter. In addition, management reported that the company showed a quarter-over-quarter increase in gross written premium, which it sees as an indication of continued strong performance.

Management acknowledged that although its financial services business does not make up a significant portion of its overall operations since the acquisition of its insurance subsidiary, the company has not been immune to the general trend in the financial services sector and has experienced losses. However, the company has taken steps to limit costs, with the expectation that the resulting savings will have an impact on the rest of its fiscal year.

The company was able to pay its fifth consecutive common stock dividend at the close of the second quarter. Although the company may harbor some minor weaknesses, we feel that they are unlikely to have a significant impact on future financial results.

Furmanite ( FRM) began as an industrial maintenance service company and is now a global organization specializing in onsite and on-line plant and pipeline maintenance.

We have rated Furmanite a buy since May 2007, most recently because of the company's strong results in the second quarter of fiscal 2008. For the second quarter, the company reported revenue growth of 20.7% year over year. In keeping with this growth, earning per share (EPS) improved significantly, rising from 10 cents in the second quarter of fiscal 2007 to 21 cents in the most recent quarter.

Net income also increased when compared with the same quarter last year, surging 98.8% from $3.85 million to $7.66 million. Additionally, strong earnings growth of 90.90% has helped the company's stock price increase 55.79% over the past year.

Furmanite believes that it has opportunities for future growth based on worldwide economic conditions. Although the company may harbor some minor weaknesses, we do not see them as likely to have a significant impact on its future financial results.

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.

If you liked this article you might like

What Is Common Stock and What Is Preferred Stock? Stock Types and Their Differences Explained

What Is Common Stock and What Is Preferred Stock? Stock Types and Their Differences Explained

10 Dividend Stocks for '30-Year' Investors

10 Dividend Stocks for '30-Year' Investors

10 Dividend Stocks for '30-Year' Investors

10 Dividend Stocks for '30-Year' Investors

10 Buy-Rated Dividend Stocks to Buy Today

10 Buy-Rated Dividend Stocks to Buy Today

Top 5 Fast-Growth Stocks: June 1

Top 5 Fast-Growth Stocks: June 1