"Under the Radar" 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.

It's tough to beat professional money managers by picking brand-name stocks. The big shots have access to management, sophisticated models and economic forecasts that you don't. But there's a shortage of research among micro-caps because there are too many stocks to cover.

As a result, small companies offer the best return potential. Many lesser-known stocks are "mispriced," meaning their share price is less than the intrinsic value of their businesses. By purchasing such stocks, you can beat professional money managers by a huge margin. It's hard to do the same by sticking with General Electric ( GE) and 3M ( MMM).

TheStreet.com Ratings

Eau Claire, Wis.-based National Presto Industries ( NPK) is a value investment deserving of recognition. The company makes small appliances, and defense and absorbent products. Although those three businesses appear to be unrelated, the company has a remarkable track record.

National Presto was founded in 1905 and started out manufacturing pressure canners for industrial use. When the U.S. Department of Agriculture deemed that method as the only safe way to pressurize low-acid foods, business took off.

Then, in 1939, the company entered the consumer market by introducing "Presto," a pressure cooker for home use. Early adoption was impressive, but the company temporarily halted operations during World War II to assist in the war effort.

During the next peacetime stretch, the company introduced new pressure cooker models and added a product to its lineup, the Presto Steam Iron, the first of its kind to use tap water instead of distilled water. The cost benefits were obvious to consumers, so the product was a hit.

National Presto's legacy of innovation continues to this day. During the fiscal first quarter, revenue rose 35% to $108 million as net income and earnings per share climbed 74% to $11 million and $1.58, respectively.

Profitability metrics demonstrate improvement. Operating margin is up 307 basis points to 14% since the year-earlier quarter and net margin widened 195 basis points to 10%. Return on assets and return on equity each stretched more than 200 basis points.

National Presto's financial position is ideal. The company has shirked debt obligations and instead financed itself with equity. Its cash balance stands at $149 million, amounting to an impressive quick ratio of 3.57. It's difficult to find a flaw on the company's balance sheet.

National Presto's businesses are poised for gains in 2009 as consumers retrench. Its line of steam cookers, deep fryers and other kitchen appliances are looking more attractive as people shift their focus from eating out to cooking at home. And the Absorbents segment manufactures generic-brand diapers, which have thrift appeal.

Despite National Presto's overwhelming advantages, its stock is cheap. The shares are trading at a price-to-earnings ratio of 10.6 and a price-to-projected-earnings ratio of 8.9, indicating a substantial discount to the S&P 500 Index and the household durables industry. The stock is down 2% in 2009 and offers a lackluster 1.33% dividend yield.

TheStreet.com Ratings gives National Presto Industries a "buy" recommendation.

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.

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