Here's our weekly look at some small-capitalization stocks that are making big moves on Wall Street.

THERE'S ALWAYS BEEN a high risk-reward correlation with small-capitalization stocks. When small companies post good news their stocks post outsize gains, and that tends to happen more to companies that show that their turnarounds are on track.

Two companies really showed the potential upside for investors willing to roll the dice this past week. Take Avici Systems, which rocketed 84% Thursday to a 15-month high of $8.02 after posting results that were better than Wall Street expected. For the first quarter, the maker of network routers for the Internet reported its net loss narrowed slightly to $5.3 million, or 41 cents a share, compared with a net loss of $5.6 million, or 44 cents, in the year-ago quarter. But this past quarter's loss was well short of the Thomson First Call consensus estimate of a 47-cent net loss.

What really got people excited was Avici blowing away revenue estimates of $8 million with its highest quarterly results since 2001 and its first-ever operating profit before charges. Revenues doubled year-over-year and soared 251% sequentially, to $21.4 million. Not including $6.7 million in charges associated with the recent decision to restructure the business, including staff reductions of nearly 40% and certain write-offs, Avici posted a pro forma profit of $2 million, or 15 cents a share, vs. a pro forma net loss of $5.2 million, or 41 cents, last year. The North Billerica, Mass., company attributed the better results to cost cutting and strong order volume from its main clients, SURFnet, IP-Only, and AT&T, its largest customer.

Like many telecommunication-equipment makers, Avici has had a tough time since its stock topped $23 in March 2004. But the company is optimistic that its recent restructuring efforts will put it well on the road to achieving long-term goals of sustainable profitability and positive cash flow.

"By restructuring the business by midyear," Bill Leighton, the company's chief executive said during Thursday's conference call, "we will be eliminating a significant portion of the current cost base and we will be driving the company to its sustainable bottom line and cash-flow breakeven."

In addition, the company raised its 2006 revenue guidance to 50% growth, up from its previous estimates that revenue would be flat with last year's sales of $37.2 million. As of March 31, the company had cash and marketable securities of $47.3 million, which equates to roughly $3.64 a share.

While Avici believes the March quarter's strength will likely continue, it lacks the visibility to provide quarterly sales forecasts. Prudential Equity Group analyst Inder Singh says after the strong first quarter the sales guidance implies quarterly revenues for the rest of the year will be below the March quarter. Because of this volatility, Singh maintained a stock rating of Underweight.

Singh wrote in a note Thursday that "the core router market represents one of the more attractive growth areas in the communications equipment space. We remain concerned, however, by the competitive pressures faced by Avici as it works to compete against Cisco Systems and Juniper Networks both of which are substantially larger and better capitalized than Avici. We believe our 'domino theory' of industry consolidation could eventually play out to the benefit of the company, though the uncertain fundamental outlook still warrants a conservative outlook, in our opinion." In addition, Singh wrote that if the economy turns downward, this would inhibit companies from spending on new technology.

A second outsize gain came this week from GreenMan Technologies, another small cap. And we mean small. These folks have a market capitalization of $8.1 million, and, this week the stock, which bottomed out in mid-January at 15 cents a share, climbed to 45 cents, a price it hasn't seen in 10 months.

Why the jump? The gains came after GreenMan boosted the credibility of its restructuring strategy with investors by naming a new chief executive officer. And he boosted his credibility by buying stock in the company. As of Thursday's close, the tire recycler was up 31% this week to 42 cents.

GreenMan is in the business of solving two very pressing environmental problems, waste removal and alternative energy sources. The Lynnfield, Mass., company takes 20 million of the 300 million auto tires discarded every year and turns them into fuel and a highly desirable building material. According to Chuck Coppa, GreenMan's chief financial officer, each tire contains 2.5 gallons of petroleum. Because it burns hotter and cleaner than coal, with less sulfur, toxic emissions are cut by 60%, says Coppa. And because it costs 15% to 25% less than coal, it provides an alternative fuel for cement kilns, paper mills and utilities.

It has been far from a smooth road for the company, however. After a series of disastrous years, GreenMan on Monday appointed board member Lyle Jensen, 54, as CEO and president, succeeding Robert Davis. According to a written statement from GreenMan's chairman, Maury Needham, Jensen was one of the company's "toughest critics with regards to balance-sheet management and multisite operational checks and balances." Previously, Jensen had been the chief operating officer of Auto Life Acquisition, which sells aftermarket automotive-fluid-maintenance equipment.

Jensen said, in a written statement, that he is ready to "accelerate" efforts to increase shareholder value. And he literally put his money where his mouth is. On Tuesday, Jensen agreed to buy 500,000 shares of unregistered common stock, valued at $140,000. In addition, outside director Nicholas DeBenedictis agreed to convert approximately $76,000 of short-term debt and accrued interest into about 273,000 shares of unregistered common stock.

CFO Coppa said this is better for the company than buying on the open market, because Jensen bought the shares directly from the company, giving it a needed cash infusion. In addition, the restricted status of the shares means he has to hold onto them for at least a year.

While the majority of the recycled tires goes to the fuel market, GreenMan also chops a significant amount into one-inch chips and smaller pieces called crumb rubber. The potential uses for crumb rubber have increased over the past few years. Currently, crumb rubber is used as a layer under artificial turf on athletic fields. The chips can also be molded into safety mats for playgrounds and a material used by civil engineers in lieu of stones on road embankment and drainage projects.

While it's in a decentralized market with a lot of small players, the company has serious financial issues. For the year ended Sept. 30, GreenMan posted a net loss of $15.2 million, vs. $2.6 million in fiscal 2004. However, about 75% of the loss comes from charges related to selling a plant in Tennessee and discontinued operations in Tennessee and Georgia. After all the one-time charges the loss was $2.8 million. Sales increased 16% to $22.1 million.

As of Sept. 30, the company had $256,492 in cash and a working capital deficiency of $8.7 million. Considering it lost money for the past 12 consecutive quarters and needs additional working capital, there are doubts about the company's ability to continue as a going concern. It's also under threat of delisting for filing its annual report late and having less than $4 million in shareholder equity. On the first issue, the annual report was filed on Thursday.

On the second issue, CFO Coppa says summer is the busiest time of the year and "we believe we can be cash flow positive in the second half of the year."

Obviously, GreenMan is a very risky play and those considering investing in it should tread cautiously with just a small part of their portfolio. Still, considering insiders own 32% of the company, the new CEO taking a stake, and the growth industry it's in, there could be significant upside potential if the company does turn itself around.