Diedrich Coffee (DDRX) continues to be the belle of the ball in the caffeinated beverage sector. Green Mountain Coffee Roasters (GMCR) Wednesday hiked its offer to acquire Diedrich, raising the bid from $32 per share to $35 in cash. The deal's total value now stands at $290 million.

"We are eager to start realizing the benefits of this transaction for our shareholders as quickly as possible, and therefore after careful deliberation, we determined to enhance our proposal to $35.00 per Diedrich share," explained Lawrence J. Blanford, CEO of Green Mountain Coffee.

Some investors shy away from small stocks, thinking they are too volatile and risky. But BusinessWeek takes a look at such stocks and finds some that could offer a lot of potential for growth.

It can be hard to find small companies that have great growth potential. Since most Wall Street analysts ignore smaller companies, it is often tough for investors to find the research that they need in their selection process, so they have to rely on their own research in order to find that perfect small cap stock.

One thing to look for when examining small cap stocks is a long and established track record. The downside to this approach is that these stocks are not going to be the next "big thing" and bring you huge profits in the short run. These stocks are the ones that typically serve a niche market, and perform that service successfully. While these will not make you rich overnight, they are fairly reliable companies you can look to for nice and steady returns. If you are the type of investor who likes to buy and hold, these are the small cap stocks for you.