TSC Ratings TheStreet.com 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.

Each business day, we compile a list of the top five stocks in one of 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.

Although the company reported its results for the fourth quarter of fiscal 2009 on June 4, our current rating is based on Hawkins' third-quarter financial results. We will update the rating if necessary once the most recent results are available to our model. For the third quarter, 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 earnings per share. 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% compared with 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.

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