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Each business day, we compile a list of the top five stocks in five categories -- fast-growth, all-around value, large-cap, mid-cap and small-cap -- 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 $50 million to $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 or 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.

Hawkins ( HWKN) formulates, blends, and distributes bulk and specialty chemicals for water treatment and industrial and pharmaceutical use. We have rated the stock a buy since January 2003 on the basis of its efficiency, solvency and solid stock price performance.

For the third quarter of fiscal 2009, the company reported very impressive revenue growth of 59.7% year over year. This growth greatly exceeded the industry average of 22.9% and appears to have contributed to improved EPS. Hawkins posted a significant change in EPS to 68 cents from 15 cents in the prior year's quarter. Net income also increased dramatically, rising 362.7% when compared to the same quarter a year ago. A further strength for the company is that it has no debt to speak of, resulting in a favorable debt-to-equity ratio of zero. To add to this, a quick ratio of 1.65 clearly demonstrates the company's ability to cover its short-term liquidity needs.

Management stated that Hawkins' business and gross profit will return to levels in line with past results over the next few months, as commodity pricing and demand have begun to level off recently. The company shows weak operating cash flow, but we feel that the strengths detailed above outweigh any potential weakness at this time.

Tompkins Financial ( TMP) is the corporate parent of three community banks: Tompkins Trust Company, The Bank of Castile and Mahopac National Bank. Its three banks primarily offer commercial banking services to individuals and businesses throughout New York state. We have rated Tompkins Financial a buy since October 2007 on the basis of its expanding profit margins, solid stock price performance, and growth in revenue, net income, and earnings per share.

For the first quarter of fiscal 2009, Tompkins' revenue increased slightly by 3.0% year-over-year. This growth appears to have trickled down to the company's bottom line, as EPS improved from $0.77 to $0.79 over the past year. Net income also increased slightly, rising 2.7% when compared to the same quarter of last year. Tompkins' gross profit margin increased from the prior year's quarter and is currently very high at 73.60%.

Management was pleased with Tompkins' strong operating results for the first quarter and feels that the company is well positioned to perform well in the future despite its predictions of continued challenges in the remainder of the fiscal year. Although the company shows weak operating cash flow and its stock has been driven to a premium valuation compared to the rest of its industry, we feel that its strengths outweigh any potential weaknesses and justify the higher price level at this time.

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. This rating is supported by several positive factors, including its largely solid financial position and expanding profit margins.

For the first quarter of fiscal 2009, APS reported a slight drop in revenue, but this does not appear to have hurt the company's bottom line, as earnings per share (EPS) improved 45.6%. The company has reported somewhat volatile earnings recently, but we feel that it is poised for EPS growth in the coming year. The company's net income also increased significantly in the first quarter, rising 39.9% when compared to the prior year's quarter. Its gross profit margin increased since the first quarter of last year, and we consider it to be strong at 43.90%.

Management was pleased to see its momentum from fiscal 2008 continue into fiscal 2009, and expects to see continued progress as the year continues. Although the company may harbor some minor weaknesses, we do not feel that they are likely to have a significant impact on future results.

Pervasive Software ( PVSW) provides embeddable data management and integration software products to customers worldwide. The stock has been rated a buy since April 2008. This rating is driven by a few notable strengths, including the company's solvency, attractive valuation levels, and growth in revenue and net income.

For the third quarter of fiscal 2009, the company reported revenue growth of 21.0% year-over-year. This growth beat the industry average of 6.9%, and appears to have trickled down to the company's bottom line, as EPS improved from 5 cents to 10 cents per share. Pervasive's net income increased significantly in the third quarter, rising 101.4% from $940,000 thousand to $1.88 million. Net operating cash flow also increased slightly, rising 7.81% to $2.14 million. In addition, Pervasive has no debt to speak of, which we consider to be a relatively favorable sign, and a quick ratio of 4.30 clearly demonstrates the company's ability to cover its short-term cash needs.

Looking ahead to the fourth quarter of fiscal 2009, Pervasive announced that it expects its revenue to be in the range of $10.5 million to $11.5 million. The company also anticipates GAAP diluted EPS of 4 cents to $7 cents in the fourth quarter. Although the company may harbor some minor weaknesses, we fell that they are unlikely to have a significant impact on future results.

National Bankshares ( NKSH) operates as a bank holding company for The National Banks of Blacksburg, which provides retail and commercial banking services to individuals, non-profits, and local government units in Virginia. We have rated the company a buy since December 2008 because of a few notable strengths, including the company's solid stock price, expanding profit margins, notable return on equity, and growth in net income and EPS.

Although National Bankshares recently reported its first quarter of fiscal 2009, our current rating is based on the fourth quarter of fiscal 2008. The company posted a slight improvement in EPS in the fourth quarter, with EPS rising from 46 cents in the fourth quarter of fiscal 2007 to 48 cents in the most recent quarter. Net income also increased in the fourth quarter, rising 3.3% from $3.22 million to $3.33 million. National Bankshares' gross profit margin is rather high at 66.4% and has increased from the fourth quarter of fiscal 2007. An additional modest strength for the company is its return on equity, which improved slightly when compared to the same quarter a year ago.

The stock has risen over the past year, reflecting the earnings growth and other positive factors similar to those cited above. It goes without saying that even the best stocks can fall in an overall down market, but we do not currently see any significant weaknesses that are likely to have a significant impact on the company's future results. Under most market conditions, this stock should still have good upside potential despite the fact that it has already risen in the past year.

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Our quantitative rating, which can be viewed for any stock through our stock screener stock rating screener, 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.