TSC 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.The following small-cap companies have market values of $50 million to $500 million, and receive "buy" ratings from TheStreet.com Ratings' 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. The numbers: Fiscal fourth-quarter revenue rose 32% to $68 million as net income surged 194% to $5.09 million and earnings per share climbed 182% to 48 cents. Operating margin increased 694 basis points to 11% and net margin jumped 413 basis points to 7.5%. The company has zero debt and ample liquidity, as reflected by a quick ratio of 2.1. The stock: Hawkins has risen 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, less than half the peer average of 20. The stock offers a weak 0.26% dividend yield. Applied Signal Technology ( APSG) provides intelligence, surveillance and reconnaissance wares for the defense and homeland security markets. The numbers: Fiscal second-quarter revenue increased 18% to $54 million as net income and earnings per share doubled to $4 million and 31 cents, respectively. Operating margin climbed 581 basis points to 12% and net margin ascended 314 basis points to 7.6%. The company has an ideal financial position, with just $4 million of debt and $55 million of cash, amounting to a high quick ratio of 4.62 and a low debt-to-equity ratio of 0.03. The stock: Applied Signal Technology is up 25% in 2009, outperforming all major U.S. indexes. The stock trades at an expensive price-to-earnings ratio of 24 and pays a 2.2% dividend yield.
American Physicians Group ( AMPH) provides medical professional liability insurance for physicians and health-care providers in Texas. The company also has an investment arm that sells advice and asset management services to institutions and wealthy individuals. The numbers: Fiscal first-quarter revenue fell 2% to $19 million as net income ascended 40% to $4.7 million and earnings per share increased 46% to 67 cents. Operating margin surged 1,054 basis points to 38% and net margin climbed 738 basis points to an impressive 25%. The company boasts a debt-to-equity ratio of 0.04 and has ample liquidity, as reflected by $38 million of cash. The stock: American Physicians Group is up 5% in 2009, outperforming the Dow and the S&P 500. Still, the stock is affordable at a price-to-earnings ratio under 8, but offers a weak 1.3% dividend yield. NCI ( NCIT) provides IT engineering and professional services to federal agencies. With mounting budget deficits and a growing national deficit, Washington is looking to cut costs and streamline. NCI offers an attractive play on this trend. The numbers: Fiscal first-quarter revenue increased 15% to $105 million as net income ascended 29% to $4.7 million and earnings per share climbed 26% to 34 cents. Operating margin improved 38 basis points to 7.6% and net margin climbed 49 basis points to 4.5%. The company has a high quick ratio of 1.6, but just $1.4 million of cash, compared with $31 million of debt. The stock: NCI is down 6% in 2009, in line with the Dow Jones Industrial Average. The stock trades at a high price-to-earnings ratio of 21 and doesn't pay dividends.
Pervasive Software ( PVSW) provides embeddable data management and integration software products worldwide. The numbers: Fiscal third-quarter revenue increased 21% to $13 million as net income and earnings per share doubled to $1.9 million and 10 cents, respectively. Operating margin widened 972 basis points to 20% and net margin climbed 570 basis points to 14%. The company has zero debt and $44 million of cash, amounting to a high quick ratio of 4.3. The stock: Pervasive Software has jumped 28% in 2009, outperforming all major U.S. indexes. The stock trades at a high price-to-earnings ratio of about 20 and doesn't pay dividends. TSC Ratings was recently given an award for "Best Stock Selection" amongst independent research providers by BNY ConvergEx Group. To see how your portfolio can utilize our research, click here. A rating can be viewed for any stock through our screener stock rating screener. Each rating is derived from a variety of fundamental and pricing figures and represents our opinion of risk-adjusted performance relative to a 5,000+ stock coverage universe. However, the rating does not incorporate all factors that can alter a stock's performance, such as corporate or industry events, technology innovations and shifts in competitive dynamics.