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

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 - Get Report) 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 $5.1 million and earnings per share climbed 182% to 48 cents. The operating margin increased to 11% and the net margin jumped to 8%. The company has zero debt and ample liquidity, as reflected by a quick ratio of 2.1.

The stock: Hawkins has increased 30% in 2009, outperforming all major U.S. indexes. Yet the stock trades at a price-to-earnings ratio under 9, indicating a discount to the market, and pays a 2.6% dividend yield.

American Physicians Group ( AMPH - Get Report) provides medical professional 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 ascended 40% to $4.7 million and earnings per share increased 46% to 67 cents. The operating margin surged to 38% and the net margin climbed to 25%. The company boasts minimal debt and ample liquidity, as reflected by $38 million of cash.

The stock: American Physicians Group is up 7% in 2009, outperforming the Dow Jones Industrial Average and the S&P 500. The stock trades at a cheap price-to-earnings ratio of 8, but offers a weak 1.3% dividend yield.

Applied Signal Technology ( APSG) provides intelligence, surveillance and reconnaissance solutions 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. The operating margin climbed to 12% and the net margin ascended to 8%. The company has an ideal financial position, with just $4 million of debt and $55 million of cash, amounting to a quick ratio of 4.6 and a debt-to-equity ratio just above zero.

The stock: Applied Signal Technology has surged 45% in 2009, outperforming all major U.S. indexes. The stock trades at an expensive price-to-earnings ratio of 28 and offers a lackluster 1.9% dividend yield.

Balchem ( BCPC - Get Report) produces specialty performance ingredients and products for the food, nutritional, feed, pharmaceutical and medical sterilization industries.

The numbers: First-quarter revenue declined 7% to $53 million, but net income jumped 31% to $6.1 million and earnings per share climbed 28% to 32 cents. The operating margin increased from 13% to 17% and the net margin improved from 8% to 12%. The company has a strong cash position, as demonstrated by $19 million of reserves and a quick ratio of 1.8. And a debt-to-equity ratio of 0.1 indicates modest leverage.

The stock: Balchem has increased 5% in 2009, outperforming the Dow and underperforming the S&P 500. The stock trades at an expensive price-to-earnings ratio of 24 and offers a dividend yield below 1%.

NCI ( NCIT) provides IT engineering and professional services to federal agencies. With mounting budget deficits and a growing national debt, Washington is looking to streamline. NCI offers an attractive play on this trend.

The numbers: 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. The operating margin improved to 8% and the net margin widened to 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 flat in 2009, underperforming the Dow and S&P 500. The stock trades at a high price-to-earnings ratio of 23 and doesn't pay dividends.

TSC Ratings was given an award this year for "Best Stock Selection" among independent research providers by BNY ConvergEx Group. A rating can be viewed for any stock through our screener. Ratings are derived from a variety of fundamental and pricing figures and represent our opinion of risk-adjusted performance. However, the rating doesn't incorporate all factors that can alter a stock's performance.