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TSC Ratings TheStreet.com Ratings provides exclusive stock, ETF and mutual fund recommendations using proprietary tools. Our "safety-first" approach aims to reduce risk while achieving performance 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.

Today, small-cap stocks are in the spotlight. These companies have market capitalizations between $50 million and $500 million and receive "buy"-ratings from our proprietary quantitative model, which considers more than 60 factors. They are ordered by their potential to appreciate.

Hawkins ( HWKN) blends and distributes bulk and specialty chemicals for water treatment and industrial and pharmaceutical use. We have rated Hawkins buy since January 2003.

Fiscal fourth-quarter revenue ascended 32% year over year to $68 million as net income surged 194% to $5.09 million and EPS climbed 182% to 48 cents. Gross, operating and net margin ascended 225, 694 and 413 basis points to 22%, 11% and 7.5%, respectively. Return on equity increased 908 basis points to 17%, and return on equity surged 1,186 basis points to 23%. The company has zero debt and ample liquidity, as reflected by a quick ratio of 2.1.

Shares of Hawkins have ascended 43% in 2009, far outperforming the Dow Jones Industrial Average and the S&P 500. Yet the stock trades at a price-to-earnings ratio under 10, indicating a sizable discount to the market average of 14 and the chemicals peer average of 20. The stock offers a weak .26% dividend yield.

Balchem ( BCPC) provides specialty performance ingredients and products for the food, nutrition, feed, pharmaceutical and medical sterilization industries. We have rated Balchem buy since June 18, 2007.

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