5 Small Stocks To Bank On

We asked five top money managers to give us their pick of the FSB 100 stock that holds the most promise for future returns.

American Medical Alert (AMAC)
A maker of remote patient-monitoring devices, American Medical Alert (No. 99) gets a thumbs-up from John McCraw, managing director of Nicholas-Applegate US Micro Cap (nacm.com), a top-performing small-cap fund in San Diego. AMA's earnings per share have been growing an average of 25% a year, but McCraw sees more to come: "AMA sits in a sweet spot as health-care costs rise."

j2 Global Communication (JCOM)
John Richardson is a senior portfolio manager and small-cap specialist with Munder Capital Management (munder.com) in Birmingham, Mich. Although Richardson cautions that the stocks of many FSB 100 companies have risen steeply in recent years, he still likes j2 Global Communication (No. 53), a telecom firm that specializes in web-based faxing and conference calling. "They've executed really well on their model," he says.

Dawson Geophysical (DWSN)
A Seismic imaging firm based in Midland, Texas, Dawson Geophysical (No. 7) is a favorite of Eric Ende, a highly rated portfolio manager with First Pacific Advisors (fpafunds. com) in Los Angeles. "They've historically been viewed as one of the best seismic operators in the Southwest," says Ende. High oil and gas prices have driven increased energy industry demand for Dawson's sophisticated 2-D and 3-D imaging services.

Smith Micro Software (SMSI)
Michael Corbett runs the Microcap Opportunities Fund at Perritt Capital Management in Chicago. "There's a bunch of great companies on your list," he says. "Question is, are they great investments at this point in time?" One stock that Corbett would still buy is Smith Micro Software (No.10), whose applications help cell phones play music through services such as V Cast from Verizon Wireless, the company's largest customer. Corbett notes that even though Smith's revenues have doubled in each of the past few years, the stock took a huge hit in early 2007 because of delays related to the rollout of Microsoft's new Vista operating system. And he likes Smith's heavily patented software. "Huge barriers to entry there," Perritt says. "We'll continue buying."

Hurco Companies (HURC)
Gerald Van Horn is president of the Stratton Small-Cap Value Fund at Stratton Management in Plymouth Meeting, PA. Given the combination of a strong international economy and the weak U.S. dollar, Van Horn likes Hurco Companies (No.19), a manufacturer of computerized machining tools that can be easily operated by unskilled workers. With 60% of its sales in Europe and another 10% in Asia, Hurco is "a play on continued global economic stability and growth," Van Horn says.

Full list
Rank   Company Number of Employees Revenue ($ millions)
1 Arena Resources 52 59.8
2 Goodrich Petroleum 84 116.2
3 Dynamic Materials 210 113.5
4 Home Solutions of America 458 127.2
5 Bolt Technology 110 32.6
6 American Science & Engineering 293 163.6
7 Dawson Geophysical 1,023 168.6
8 Palomar Medical Technologies 210 126.5
9 Perficient 972 160.9
10 Smith Micro Software 128 54.5
11 Vasco Data Security International 184 76.1
12 Fuel Tech 137 75.1
13 Somanetics 70 28.7
14 Thomas Group 155 59.5
15 The Knot 367 72.7
16 North American Galvanizing 368 74.1
17 Astronics 787 110.8
18 Vaalco Energy 16 98.3
19 Hurco Companies 320 148.5
20 Trio-Tech International 605 29.1
21 Aldila 1,366 72.4
22 United Therapeutics 285 159.6
23 Elecsys 121 14.7
24 PrimeEnergy 206 92.4
25 Sun Hydraulics 663 142.3
26 Parallel Petroleum 41 97.0
27 U.S. Lime & Minerals 317 118.7
28 Edge Petroleum 75 120.0
29 Ansoft 305 77 .2
30 Cybex International 547 126.9
31 Jupitermedia 678 137.5
32 Traffix 150 72.8
33 Gaming Partners International 760 74.0
34 RELM Wireless 92 32.4
35 Meadow Valley 83 195.5
36 Delta Petroleum 122 176.6
37 Lifecell 335 141.7
38 GeoResources 13 8.9
39 Charles & Colvard 58 40.7
40 Wayside Technology Group 97 182.0
41 Quality Systems 618 119.3
42 ADAM 100 16.5
43 Lifecore Biomedical 216 63.1
44 Cybersource 247 70.2
45 Carrizo Oil & Gas 80 82.9
46 OYO Geospace 1,100 103.7
47 Amerigon 59 50.6
48 Core Molding Technologies 1,379 162.3
49 Pioneer Behavioral Health 510 38.0
50 Concur Technologies 542 97.1
51 Rochester Medical 213 21.7
52 Supertex 400 80.1
53 j2 Global Communications 341 181.1
54 MEDTOX Scientific 460 69.8
55 Ebix 292 29.3
56 Universal Security Instruments 18 28.9
57 KMG Chemicals 115 71.0
58 Meridian Bioscience 400 108.4
59 Cavco Industries 1,075 189.5
60 K-Tron International 625 148.1
61 Sonic Solutions 765 148.7
62 Spectranetics 311 63.5
63 Shoe Pavilion 512 131.3
64 Famous Dave's of America 270 116.6
65 Parlux Fragrances 148 182.2
66 Hauppauge Digital 140 97.7
67 Abatix 105 66.5
68 Sl Industries 1,900 176.8
69 CoStar Group 1,293 158.9
70 Logility 140 37.3
71 Portfolio Recovery Associates 1,291 188.3
72 Monarch Casino & Resort 1,900 175.7
73 IntegraMed America 950 126.4
74 American Technical Ceramics 769 84.1
75 Spectrum Control 1,520 25.7
76 SonoSite 550 171.1
77 Forrester Research 779 181.5
78 Acme United 120 56.9
79 Websense 687 178.8
80 Rocky Mountain Chocolate Factory 165 28.1
81 Natural Resource Partners 55 170.7
82 Providence Service 2,811 191.9
83 NuCo2 715 116.2
84 CAM Commerce Solutions 190 27.2
85 Vital Images 283 70.5
86 Schmitt Industries 37 11.5
87 Globecomm Systems 206 126.0
88 Atlantic Tele-Network 852 155.4
89 Nathan's Famous 249 41.4
90 Novamed 439 108.4
91 Tech/Ops Sevcon 160 34.6
92 Streamline Health Solutions 105 16.1
93 Psychemedics 104 23.4
94 Panhandle Oil & Gas 16 37.5
95 Balchem 230 100.9
96 Lifeway Foods 120 27.7
97 Online Resources 600 91.7
98 Rimage 205 103.3
99 American Medical Alert 531 30.8
100 Computer Programs & Systems 941 116.0