The strength of this rally has chased off investors who assume that the only value plays in the space entail higher levels of risk. But we’ve identified four small-cap names that boast solid balance sheets and plenty of potential upside.

Small Mall

P.F. Chang’s China Bistro (NYSE: PFCB), the largest chain of Asia-inspired casual restaurants in the US, operates 201 eponymous locations in 38 states and 168 Pei Wei fast-casual locations. The company has parlayed the popularity of its restaurants into a line of frozen foods, available at grocery stores nationwide.

Although P.F. Chang’s measured growth story means that its restaurants will never be as ubiquitous as McDonald’s (NYSE: MCD) golden arches, an important secular trend is on its side: Consumers tend to regard its fare as a healthier alternative to traditional fast food.

The firm has managed to grow both revenue and profit margins, despite weak consumer spending and a sharp reduction in the number of new restaurant openings. The company’s long-term supply agreements for rice and meats have largely shielded its margins from rising input costs, while the popularity of its restaurants enabled management to increase menu prices by 2 to 3 percent over the past year.

With a debt-to-equity ratio of only 0.3 and a cash hoard of more than $71 million, P.F. Chang’s boasts one of the strongest balance sheets among its small-cap peers. The outfit’s annual revenue growth has averaged almost 9 percent in recent years—compared to an industry average of about 5 percent. Earnings have increased at an average annual rate of more than 14 percent.

Insperity (NYSE: NSP) provides a range of human resources (HR) functions to more than 100,000 small and midsize businesses and more than 2 million individual employees. These services include pre-employment screening and hiring as well as performance tracking and other business solutions.

Not only do Insperity’s economies of scale enable its customers to perform critical HR functions at a reasonable price, but the firm also assumes legal responsibility for complying with ever-changing employment laws—a major headache for many small businesses. Because Insperity’s services become closely enmeshed with its customers’ operations, customer defections are relatively rare.

With the economy recovering and businesses beginning to hire, Insperity’s revenue has picked up. First-quarter sales jumped 17 percent from year-ago levels, white cost controls widened the company’s profit margins to 2.8 percent.

Insperity’s compensation hinges on the total cost of each employee, including salary and benefits. As the US economy picks up steam, Insperity’s client list—and the number of employees it serves—should grow substantially.

The riskiest name in our quartet of small-cap value plays is Meredith Corp (NYSE: MDP), a media outfit that owns 12 television stations and a portfolio of 25 magazines, including Better Homes and Gardens, Fitness and American Baby. Overall, the company’s media holdings reach an audience of roughly 85 million people on a monthly basis.

Although first-quarter revenue of $341 million was little changed from year-ago levels, an uptick in advertising rates enabled Meredith’s local media group—home to the firm’s television operations—to grow its sales by 5 percent. Revenue from brand licensing also increased by 15 percent, as Wal-Mart Stores (NYSE: WMT) expanded its line of Better Homes and Gardens-branded merchandise.

But a solid first quarter doesn’t disguise the substantial challenges facing Meredith. Circulation levels and advertising revenue continue to dwindle throughout the publishing industry. Management has launched an aggressive campaign to expand the firm’s digital presence, a move that should stabilize earnings.

Meredith Corp also has a long history of sharing its good fortunes with investors. Not only does the company return a large percentage of its free cash flow to shareholders in the form of dividends, but management h as increased the quarterly payout in each of the past 16 years.

Tetra Tech (NSDQ: TTEK) is an environmental consulting firm that advises public and private entities on water quality issues. The firm has designed desalination facilities in Florida since the 1990s and worked on California’s first desalination plant.

But water quality isn’t solely a domestic concern. Three years ago, international customers accounted for less than 1 percent of Tetra Tech’s revenue; in 2001, overseas markets are expected to generate 28 percent of the company’s sales. The federal government accounts for 40 percent of revenue, while commercial clients contribute roughly 20 percent of overall sales.

Tetra Tech as established the ambitious goal of growing its international business to the point that 40 percent of its revenue comes from overseas clients. This plan also calls fort he company to generate 20 percent of its revenue from commercial customers in the US.

Tetra Tech is already enjoying the benefits of an improving client mix and increased demand for its services. In the firm’s fiscal second quarter, net revenue soared 32 percent to $430 million, while earnings shot up by 21 percent. The company’s backlog of projects also swelled to almost $2 billion, cushioning future earnings for at least two years.