Hawkins, Atrion: Top 5 Small-Cap Stocks

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BOSTON ( TheStreet) -- The following 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're ordered by their potential to appreciate, starting with the company with the best growth prospects.

Hawkins ( HWKN) makes specialty chemicals.

The numbers: Fiscal first-quarter profit increased 24% to $6.1 million, or 58 cents a share, as revenue grew 18% to $74 million. Its gross margin remained steady at 24% and its operating margin advanced from 12% to 13%. Hawkins has an ideal financial position, with no debt and ample liquidity, evident in its quick ratio of 2.8.

The stock: Hawkins has increased 50% this year, outpacing major U.S. indices. The stock trades at a price-to-earnings ratio of 10, a discount to the market and chemical peers. Shares pay a 2.4% dividend yield.

American Physicians Service Group ( AMPH) provides medical-liability insurance and investment-management services.

The numbers: Second-quarter profit decreased 20% to $4.9 million, or 70 cents a share, as revenue declined 13% to $20 million. Its gross margin fell from 58% to 44% and its operating margin dropped from 51% to 38%. The company has an ideal financial position, with $46 million of cash, compared to $6.5 million of debt.

The stock: American Physicians is up 14% this year, trailing major U.S. indices. The stock trades at a price-to-earnings ratio of 9, a discount to the market and insurance peers. The company doesn't pay dividends.

The First of Long Island ( FLIC) is a commercial bank in New York.

The numbers: Second-quarter profit increased 3% to $3.4 million, or 47 cents a share, as revenue grew 13% to $18 million. Its gross margin was little changed at 73% and its operating margin declined from 35% to 34%. The company is adequately capitalized, evident in its risk-based capital ratio of 17%. A debt-to-equity ratio of 1.5 indicates higher-than-ideal leverage.

The stock: The First of Long Island has increased 14% this year, more than the Dow Jones Industrial Average, but less than the S&P 500 Index. The stock trades at a price-to-earnings ratio of 14, a discount to the market and regional banking peers. Shares pay a 3.1% dividend yield.

NCI ( NCIT) provides technology consulting to government agencies.

The numbers: Second-quarter profit rose 26% to $5.1 million, or 37 cents a share, as revenue advanced 13% to $109 million. Its gross margin declined from 14% to 13% and its operating margin rose from 8% to 9%. A quick ratio of 1.6 demonstrates ample liquidity. A debt-to-equity ratio of 0.2 indicates modest leverage.

The stock: NCI is down 3% this year, lagging behind major U.S. indices. The stock trades at a price-to-earnings ratio of 21, a premium to the market, but a discount to tech consulting peers. The company doesn't pay dividends.

Atrion ( ATRI) sells health-care products.

The numbers: Second-quarter net income increased 13% to $4.7 million and earnings per share climbed 12% to $2.30. Revenue grew 7% to $26 million. Its gross margin rose from 52% to 53% and its operating margin jumped from 25% to 27%. The company has an ideal financial position, with $22 million of cash and no debt.

The stock: Atrion is up 43% this year, beating major U.S. indices. The stock trades at a price-to-earnings ratio of 17, a discount to the market and health care supply peers. Shares pay a 1% dividend yield.

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.

-- Reported by Jake Lynch in Boston.

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