For the past ten years the stocks picked by BusinessWeek’s Gene G. Marcial have outperformed the S&P 500, the Dow Jones Industrial Average and the Russell 2000 after one day and after one, three and six months. Between 1997 through the end of last year, the stocks featured in Marcial’s “Inside Wall Street” column returned, on average, 7.1% in the immediate six-month time span, two percentage points better than the Russell 2000.

Small-cap stocks have been a big reason for Marcial’s success over the years. Among the companies Marcial has recommended this year are Pipex Pharmaceuticals, Inc. (AMEX: PP), Ultralife Batteries, Inc. (Nasdaq: ULBI), Exponent, Inc. (Nasdaq: EXPO), Cardiac Science Corp. (Nasdaq: CSCX), and USA Technologies, Inc. (Nasdaq: USAT).

In the following interview with SmallCapInvestor.com Marcial talks about his approach to stock picking and his outlook for small-cap stocks.

Explain your investment process and criteria for finding great stocks.

Since I am a financial journalist, the first question I ask about any investment idea is, "What is the story, and will it be of great interest to my readers?" I am not surprised that this approach results in me getting good stocks to write about, and often they are undiscovered and below the radar screen of the institutions. I believe that a good company with a great story -- about a product, technology, earnings growth, possibly a takeover play, or a restructuring, including spin-offs or asset sales -- could well be a great stock to buy.

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