SAN FRANCISCO (Dow Jones) -- On Wall Street there are plenty of "story" stocks, those well-known companies about which many words are written and many tales are told. Then there are the stocks Michael Corbett buys.

Corbett's investment strategy is straightforward. First, the mutual-fund manager scours the market's smallest stocks by market size -- about $80 million on average -- culling those with strong businesses, little or no analyst coverage and a chance to build a wider following.

Between 150 and 200 of these budding prospects fill the Perritt Emerging Opportunities Fund (NASDAQ-MF:PREOX) (PREOX) that Corbett runs, holding them, ideally for several years, as sales, earnings and market value grow.

"All of these companies, nobody's really following them," Corbett said. "When you get below that $100 million market cap, there never seems to be too much interest."

Corbett's style is plain but not simple. He and his team dig through a company's financial history, looking for a solid balance sheet, smart uses of cash and expanding profit margins. Then Corbett gets acquainted with the company's leadership and business model to see if management can continue to deliver impressive results. Armed with that confidence, he estimates what the shares could fetch over the next two years to five years and compares the valuation against the stock's current price.

"We look for companies that aren't traded a lot, because nobody knows about it," Corbett said. "If we do our homework and research, it should evolve into a company that everybody wants to own."

Corbett evidently did his homework on a trio of stocks he recommended in a mid-May interview. The three Emerging Opportunities holdings gained an average of 27% in the 13 weeks after he chose them, giving Corbett the MarketWatch Stockpicker of the Quarter award over rival investors.

In winning, Corbett topped 16 other fund managers featured in MarketWatch's column "The Stockpickers" during the second quarter of 2006.

Force Protection Inc. (NASDAQ-OTCBB:FRPT) (FRPT) , a maker of specialized military vehicles, was a driving force, gaining 62.7% from its closing on May 12, the last trading day before the interview with Corbett appeared on MarketWatch, through the market close on Aug. 11.

Another favorite, imaging-equipment maker Rimage Corp. (NASDAQ-NMS:RIMG) (RIMG) , rose 18.3% in the 13 weeks. A third stock, casino operator Century Casinos Inc. (NASDAQ-SMALL:CNTY) (CNTY) , finished the period essentially flat.

The selections vaulted Corbett over other investment professionals featured in The Stockpickers in the second quarter. In these stories, investors tap three stocks whose performance is tracked over the following 13 weeks -- the last period of which began on June 27 and ended on Sept. 26.