"Under-the-Radar Stocks" is a daily feature that uncovers little-known companies worthy of investors' consideration. Check in at 5 every morning to find out about stocks that tend to beat their bigger brethren.Technology stocks took the spotlight Monday as Cisco ( CSCO) was selected to replace General Motors ( GM) in the Dow Jones Industrial Average. Apple ( AAPL), Research in Motion ( RIMM), Amazon ( AMZN) and Google ( GOOG), known as the "four horsemen of tech," have jumped more than 40% this year as the Nasdaq has risen 16%. Despite the tech rebound, undiscovered bargains remain. The following small-cap companies offer strong balance sheets, a discount and, the ultimate tech rarity, high dividend yields. Minnetonka, Minnesota-based Communications Systems ( JCS) makes and sells modular connecting and wiring devices and media and rate conversion products in the U.S., U.K. and China. Although the company's first-quarter revenue declined 12%, earnings per share ballooned 650%. Communications Systems has an ideal financial structure. It holds just $3 million of debt and over $31 million in cash reserves. TheStreet.com Ratings upgraded Communications Systems to "buy" on May 12. In line with the company's impressive operating performance, its stock has risen 37% this year. Nevertheless, the shares remain cheap compared with other communications equipment firms. They trade at a price-to-earnings ratio of 10.88, 58% cheaper than the peer average. The shares are also cheap on the basis of sales and book value. At its current price, the stock offers a dividend yield of 5.26%, higher than the S&P 500 Index's average of 3.42%. The company has a market value of just $82 million. Huntsville, Alabama-based Adtran ( ADTN) develops products and services that provide access to communications networks. The company's first-quarter sales and earnings per share fell 8% to $111 million and $0.24, respectively. Although those results suggest weakness, Adtran is poised for growth due to its strong financial position. The company boasts a quick ratio of 3.97, indicating ample cash reserves, and has a low debt-to-equity ratio of 0.12. TheStreet.com Ratings lifted the stock to "buy" on April 30.
Similar to Communications Systems, Adtran is undervalued by the market. The shares are trading at a discount in the communications equipment industry on the basis of earnings, sales and cash flow. With a price-to-earnings ratio of 17.32, Adtran is 32% cheaper than its average peer. The stock has a dividend yield of 1.7%, beating the Nasdaq 100's average of 0.75%. Consider this stock for appreciation potential. The company has a market capitalization of $1.3 billion. TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.