(FORTUNE Small Business) – Even before New York State Attorney General Eliot Spitzer began documenting conflicts of interest in stock research at investment banks, Paul Noglows saw that Wall Street needed to be cleaned up for the benefit of the typical investor. A former equities analyst, Noglows wanted to start an independent firm that would produce genuinely useful research—no more stock reports that were voluminous but didn't say much, no vague ratings such as "market perform," and no ties to investment banking. In 2003, Noglows co-founded IRG Research to provide reports on small-cap and mid-cap stocks to mutual funds and hedge funds. The firm is his second turn as an entrepreneur: In 1996, Noglows helped found the Internet research unit at Hambrecht & Quist, a San Francisco investment-banking firm that later merged with J.P. Morgan, where he produced influential coverage of dot-coms. "I'd never even used e-mail at the time, so it was wild meeting people like Yahoo founder Jerry Yang," he says.

Today Noglows, 41—along with co-founder Joe Marino, 45, and a staff of 41—sifts through companies with market caps of less than $2 billion, looking for undiscovered stocks. IRG offers free reports to select clients, and if the clients like the ideas, they purchase securities through IRG, paying a commission of 4 to 6 cents a share. That's a markup of 50% to 100% over the typical commission, to cover the cost of research. (They're honor-bound not to trade on IRG's ideas with other brokers.)

IRG's launch has coincided with a period of strong growth for small stocks: The Russell 2000 index was up 17.6% in 2004 (compared with 11.2% for the S&P 500). Such gains in a tough market have attracted more investors—and analysts—to the sector; 2,770 small stocks are now tracked by at least one analyst, compared with 2,701 a year ago, according to Zacks Investment Research. Though analysts predict slower earnings growth in 2005, Noglows still has a handful of picks that he thinks can shine no matter what the economy brings. Here are three.

BankAtlantic Bancorp (BBX), a fast-growing Florida institution, woos customers by staying open seven days a week, offering late-night banking once a week, and providing free use of coin-return machines. Those marketing efforts have helped boost deposits at least 30% in eight of the past nine quarters and should help kick growth even higher later this year, when the company plans to open new branches. IRG has a price target of $23 on the stock, which recently traded at $18.90.

Another pick is Tekalec (TKLC), a provider of call-center and signaling systems to telecom carriers such as Sprint, as well as voice over Internet protocol (VOIP) switching technology. IRG analyst Erik Zamkoff says Tekalec is well positioned to profit from both the old and the new in telecom; its existing signaling business is benefiting from growth in wireless traffic, while VOIP could become a major growth driver in the future. He has a price target of $27, with the stock recently trading at $23.91.

Looking abroad, IRG also recommends SBS Broadcasting (SBTV), based in Luxembourg but with operations in fast-growing markets such as Hungary. Specializing in reality TV, SBS buys successful programs from overseas—such as Temptation Island and Big Brother—and adapts them to local markets. IRG analyst David Kestenbaum thinks the company is ripe for takeover by a larger broadcaster, and he has a price target of $45, compared with the current price of $36.59.