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 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. The numbers: Fiscal fourth-quarter revenue ascended 32% to $68 million as net income surged 194% to $5.1 million and earnings per share climbed 182% to 48 cents. Operating margin increased to 11% and net margin jumped 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, outperforming all major U.S. indexes. Yet the stock trades at a price-to-earnings ratio under 10, indicating a discount to the market. Hawkins pays a weak 0.3% dividend. American Physicians Group ( AMPH) provides medical liability insurance for physicians and health-care providers in Texas. The company also has an investment arm that provides advice and asset management to institutions and wealthy individuals. The numbers: First-quarter revenue fell 2% to $19 million as net income increased 40% to $4.7 million and earnings per share jumped 46% to 67 cents. Operating margin surged to 38% and net margin climbed to 25%. The company boasts a minuscule debt load and has ample liquidity, as reflected by $38 million of cash. The stock: American Physicians Group is up 4% in 2009, outperforming the Dow and the S&P 500. The stock is affordable at a price-to-earnings ratio under 8, but offers a small 1.3% dividend yield.
Applied Signal Technology ( APSG) provides intelligence, surveillance and reconnaissance services to 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 to 12% and net margin ascended 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 4.6 and a debt-to-equity ratio just above zero. The stock: Applied Signal Technology is up 34% in 2009, outperforming all major U.S. indexes. The stock trades at an expensive price-to-earnings ratio of 26 and offers a 2.1% dividend yield. NCI ( NCIT) provides IT engineering and professional solutions 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 rose 29% to $4.7 million and earnings per share climbed 26% to 34 cents. Operating margin improved to 7.6% and net margin stretched to 4.5%. The company has a high quick ratio of 1.6, but just $1.4 million of cash, compared to $31 million of debt. The stock: NCI is up 4% in 2009, outperforming the Dow and S&P 500. The stock trades at a high price-to-earnings ratio of 24 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 ascended to 20% and net margin climbed 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 soared 33% in 2009, outperforming all major U.S. indexes. The stock trades at a high price-to-earnings ratio around 20 and doesn't pay dividends. TSC Ratings was recently given an award for "Best Stock Selection" among 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. 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.