BOSTON ( TheStreet) -- The hedge fund Greenlight Capital, run by David Einhorn, has returned 22% annually, on average, since its 1996 inception, outperforming U.S. stock benchmarks by wide margins. Here are three of Einhorn's favorite small-cap stocks.

3. Einstein Noah Restaurant Group ( BAGL) owns and franchises bagel shops. During the past three years, it has doubled earnings per share annually, on average. Greenlight Capital owns about 11 million shares, or 65% of the float.

Quarter: First-quarter profit tumbled 66% to $620,000, or 3 cents, as revenue inched up to $101 million. The operating margin widened from 3.1% to 4.4%. Einstein holds $11 million of cash and $96 million of debt, equal to a debt-to-equity ratio of 1.3.

Stock: Einstein Noah has advanced 71% during the past year, beating U.S. stock indices. It trades at a price-to-projected-earnings ratio of 14 and a price-to-cash-flow ratio of 5.9, 59% and 54% discounts to peer averages. It's also cheap based on sales.

Consensus: Of analysts covering Einstein Noah, five, or 63%, advise purchasing its shares and three recommend holding them. D.A. Davidson offers a price target of $17, leaving a potential return of 29%. Jefferies ( JEF) expects the stock to hit $15.

2. NVR ( NVR) is a homebuilder and mortgage banker, specializing in single-family homes, townhouses and condominiums in the Washington, D.C., and Baltimore areas. During the first quarter, Greenlight purchased 55,617 shares, or 0.9% of the float.

Quarter: First-quarter profit soared 78% to $32 million, or $5.01, as revenue grew 5.6% to $594 million. The operating margin extended from 6% to 9.3%. NVR has $1.4 billion of cash and $192 million of debt, equal to $1.2 billion of net liquidity.

Stock: NVR has gained 43% during the past year, outperforming U.S. benchmarks. It sells for a price-to-projected-earnings ratio of 15, a 38% discount to the industry average. The shares are costly based on book value, sales and cash flow.

Consensus: Of researchers following NVR, two, or 29%, advise purchasing its shares and five suggest holding them. Goldman Sachs ( GS) expects the stock to rise 29% to $880. JMP Group ( JMP) predicts NVR will rise to $800.

1. URS Corp. ( URS) provides engineering and technical services to power, infrastructure and industrial markets. Since 2007, the company has increased revenue 34% annually. Greenlight cut its position in URS by half during the first quarter, but still owns 2.2% of the float.

Quarter: First-quarter profit rose 27% to $96 million, or $1.17, as revenue declined 12% to $2.2 billion. The operating margin tightened from 4.9% to 4.6%. URS has $639 million of cash and $804 million of debt, equal to a debt-to-equity ratio of 0.2.

Stock: URS has fallen 7% during the past year, lagging behind major indices. It trades at a price-to-projected-earnings ratio of 12 and a price-to-book ratio of 1, 49% and 48% discounts to peer averages. It's also cheap based on cash flow.

Consensus: Of firms rating URS Corp., 10, or 53%, advocate purchasing its shares, eight recommend holding and one says to hold them. FBR ( FBCM) forecasts that the stock will gain 34% to $60. Broadpoint ( BPSG) expects the shares to hit $58.

-- Reported by Jake Lynch in Boston.

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