These two small caps offer big value…

Article Excerpt

Many investors avoid small cap stocks, because they tend to more volatile than larger companies. You can offset this risk by sticking with small caps that are leaders in their niche markets. Here are three of our favourite small-cap stocks. However, only two are buys right now. MTS SYSTEMS CORP. $37 (Nasdaq symbol MTSC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 15.6 million; Market cap: $577.2 million; Price-to-sales ratio: 1.3; Dividend yield: 2.7%; TSINetwork Rating: Average; www.mts.com) makes equipment and software that tests materials, machines and structures. This helps manufacturers lower their costs and improve the quality of their products. MTS continues to see strong demand for its technology. New orders rose 27.5% in its 2011 fiscal year, which ended October 1, 2011, to a record $540.0 million from $423.5 million in 2010. During the year, sales rose 24.9%, to $467.4 million from $374.1 million a year earlier. Earnings jumped 174.2%, to a record $50.9 million from $18.6 million. Earnings per…